Correlation Between Large Company and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Large 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 Large 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 Large Pany Value and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Large 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 Large Company with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Company and Franklin Lifesmart.
Diversification Opportunities for Large Company and Franklin Lifesmart
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Large and Franklin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Large Pany Value and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Large 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 Large Pany Value 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 Large Company i.e., Large Company and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Large Company and Franklin Lifesmart
Assuming the 90 days horizon Large Pany Value is expected to generate 3.08 times more return on investment than Franklin Lifesmart. However, Large Company is 3.08 times more volatile than Franklin Lifesmart Retirement. It trades about 0.35 of its potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about 0.31 per unit of risk. If you would invest 2,272 in Large Pany Value on September 3, 2024 and sell it today you would earn a total of 138.00 from holding Large Pany Value or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Pany Value vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| Large Pany Value |
| Franklin Lifesmart |
Large Company and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Company and Franklin Lifesmart
The main advantage of trading using opposite Large Company and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large 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.| Large Company vs. Angel Oak Financial | Large Company vs. Gabelli Global Financial | Large Company vs. Fidelity Advisor Financial | Large Company vs. 1919 Financial Services |
| Franklin Lifesmart vs. Live Oak Health | Franklin Lifesmart vs. Baron Health Care | Franklin Lifesmart vs. Eventide Healthcare Life | Franklin Lifesmart vs. Alphacentric Lifesci Healthcare |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |