Correlation Between Franklin Lifesmart and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Dow Jones 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 Franklin Lifesmart and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart 2060 and Dow Jones Industrial, you can compare the effects of market volatilities on Franklin Lifesmart and Dow Jones 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 Franklin Lifesmart with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Dow Jones.
Diversification Opportunities for Franklin Lifesmart and Dow Jones
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Dow is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2060 and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Franklin Lifesmart 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 Franklin Lifesmart 2060 are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Dow Jones go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Dow Jones
Assuming the 90 days horizon Franklin Lifesmart 2060 is expected to under-perform the Dow Jones. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Lifesmart 2060 is 1.28 times less risky than Dow Jones. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,191,475 in Dow Jones Industrial on September 25, 2024 and sell it today you would earn a total of 99,220 from holding Dow Jones Industrial or generate 2.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Lifesmart 2060 vs. Dow Jones Industrial
Performance |
Timeline |
Franklin Lifesmart and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Franklin Lifesmart 2060
Pair trading matchups for Franklin Lifesmart
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Franklin Lifesmart and Dow Jones
The main advantage of trading using opposite Franklin Lifesmart and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
Dow Jones vs. Aerofoam Metals | Dow Jones vs. Lion One Metals | Dow Jones vs. Blue Moon Metals | Dow Jones vs. Xunlei Ltd Adr |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Bonds Directory Find actively traded corporate debentures issued by US companies |