Correlation Between Vanguard Star and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Vanguard Star 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 Vanguard Star and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Star Fund and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Vanguard Star 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 Vanguard Star with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Star and Franklin Lifesmart.
Diversification Opportunities for Vanguard Star and Franklin Lifesmart
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VANGUARD and Franklin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Star Fund and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Vanguard Star 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 Vanguard Star Fund 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 has no effect on the direction of Vanguard Star i.e., Vanguard Star and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Vanguard Star and Franklin Lifesmart
Assuming the 90 days horizon Vanguard Star Fund is expected to generate 1.68 times more return on investment than Franklin Lifesmart. However, Vanguard Star is 1.68 times more volatile than Franklin Lifesmart Retirement. It trades about 0.31 of its potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about 0.35 per unit of risk. If you would invest 2,907 in Vanguard Star Fund on September 5, 2024 and sell it today you would earn a total of 86.00 from holding Vanguard Star Fund or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Star Fund vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| Vanguard Star |
| Franklin Lifesmart |
Vanguard Star and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Star and Franklin Lifesmart
The main advantage of trading using opposite Vanguard Star and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Star 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.| Vanguard Star vs. Vanguard Wellington Fund | Vanguard Star vs. Vanguard Wellesley Income | Vanguard Star vs. Vanguard Windsor Ii | Vanguard Star vs. Vanguard Health Care |
| Franklin Lifesmart vs. Ab Global Risk | Franklin Lifesmart vs. Pioneer High Yield | Franklin Lifesmart vs. Vanguard Star Fund | Franklin Lifesmart vs. Victory High Income |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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