Correlation Between Victory Diversified and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Victory Diversified and Franklin Lifesmart at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Victory Diversified and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Diversified Stock and Franklin Lifesmart 2050, you can compare the effects of market volatilities on Victory Diversified and Franklin Lifesmart and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Victory Diversified with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Diversified and Franklin Lifesmart.
Diversification Opportunities for Victory Diversified and Franklin Lifesmart
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Victory and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Victory Diversified Stock and Franklin Lifesmart 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2050 and Victory Diversified is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Victory Diversified Stock are associated (or correlated) with Franklin Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2050 has no effect on the direction of Victory Diversified i.e., Victory Diversified and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Victory Diversified and Franklin Lifesmart
Assuming the 90 days horizon Victory Diversified is expected to generate 1.09 times less return on investment than Franklin Lifesmart. In addition to that, Victory Diversified is 1.38 times more volatile than Franklin Lifesmart 2050. It trades about 0.08 of its total potential returns per unit of risk. Franklin Lifesmart 2050 is currently generating about 0.11 per unit of volatility. If you would invest 1,239 in Franklin Lifesmart 2050 on September 12, 2024 and sell it today you would earn a total of 371.00 from holding Franklin Lifesmart 2050 or generate 29.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victory Diversified Stock vs. Franklin Lifesmart 2050
Performance |
| Timeline |
| Victory Diversified Stock |
| Franklin Lifesmart 2050 |
Victory Diversified and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Diversified and Franklin Lifesmart
The main advantage of trading using opposite Victory Diversified and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Diversified position performs unexpectedly, Franklin Lifesmart can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Victory Diversified vs. Vanguard Total Stock | Victory Diversified vs. Vanguard 500 Index | Victory Diversified vs. Vanguard Total Stock | Victory Diversified vs. Vanguard Total Stock |
| Franklin Lifesmart vs. Pace High Yield | Franklin Lifesmart vs. Metropolitan West High | Franklin Lifesmart vs. Calvert High Yield | Franklin Lifesmart vs. Ab Global Risk |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.
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