Correlation Between Virtus Dfa and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Virtus Dfa 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 Virtus Dfa and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Dfa 2040 and Franklin Lifesmart 2050, you can compare the effects of market volatilities on Virtus Dfa 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 Virtus Dfa with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dfa and Franklin Lifesmart.
Diversification Opportunities for Virtus Dfa and Franklin Lifesmart
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virtus and FRANKLIN is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dfa 2040 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 Virtus Dfa 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 Virtus Dfa 2040 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 Virtus Dfa i.e., Virtus Dfa and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Virtus Dfa and Franklin Lifesmart
Assuming the 90 days horizon Virtus Dfa 2040 is expected to generate 0.73 times more return on investment than Franklin Lifesmart. However, Virtus Dfa 2040 is 1.37 times less risky than Franklin Lifesmart. It trades about 0.14 of its potential returns per unit of risk. Franklin Lifesmart 2050 is currently generating about 0.1 per unit of risk. If you would invest 1,092 in Virtus Dfa 2040 on September 3, 2024 and sell it today you would earn a total of 124.00 from holding Virtus Dfa 2040 or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Dfa 2040 vs. Franklin Lifesmart 2050
Performance |
| Timeline |
| Virtus Dfa 2040 |
| Franklin Lifesmart 2050 |
Virtus Dfa and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Dfa and Franklin Lifesmart
The main advantage of trading using opposite Virtus Dfa and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Dfa 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.| Virtus Dfa vs. American Funds American | Virtus Dfa vs. American Funds American | Virtus Dfa vs. American Balanced | Virtus Dfa vs. American Balanced Fund |
| Franklin Lifesmart vs. Vanguard Target Retirement | Franklin Lifesmart vs. American Funds 2050 | Franklin Lifesmart vs. American Funds 2050 | Franklin Lifesmart vs. American Funds 2050 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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