Correlation Between Valic Company and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Valic Company 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 Valic Company and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valic Company I and Franklin Lifesmart 2045, you can compare the effects of market volatilities on Valic Company 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 Valic Company with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Franklin Lifesmart.
Diversification Opportunities for Valic Company and Franklin Lifesmart
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valic and Franklin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Franklin Lifesmart 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2045 and Valic Company 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 Valic Company I 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 2045 has no effect on the direction of Valic Company i.e., Valic Company and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Valic Company and Franklin Lifesmart
Assuming the 90 days horizon Valic Company I is expected to generate 1.85 times more return on investment than Franklin Lifesmart. However, Valic Company is 1.85 times more volatile than Franklin Lifesmart 2045. It trades about 0.07 of its potential returns per unit of risk. Franklin Lifesmart 2045 is currently generating about 0.12 per unit of risk. If you would invest 1,063 in Valic Company I on September 12, 2024 and sell it today you would earn a total of 300.00 from holding Valic Company I or generate 28.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Valic Company I vs. Franklin Lifesmart 2045
Performance |
| Timeline |
| Valic Company I |
| Franklin Lifesmart 2045 |
Valic Company and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Franklin Lifesmart
The main advantage of trading using opposite Valic Company and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company 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.| Valic Company vs. Vanguard Small Cap Value | Valic Company vs. Vanguard Small Cap Value | Valic Company vs. Us Small Cap | Valic Company vs. Us Targeted Value |
| Franklin Lifesmart vs. Valic Company I | Franklin Lifesmart vs. Boston Partners Small | Franklin Lifesmart vs. Mutual Of America | Franklin Lifesmart vs. Royce Opportunity Fund |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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