Correlation Between Franklin Lifesmart and Americafirst Large
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Americafirst Large 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 Americafirst Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart Retirement and Americafirst Large Cap, you can compare the effects of market volatilities on Franklin Lifesmart and Americafirst Large 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 Americafirst Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Americafirst Large.
Diversification Opportunities for Franklin Lifesmart and Americafirst Large
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Americafirst is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Americafirst Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Large Cap 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 Retirement are associated (or correlated) with Americafirst Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Large Cap has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Americafirst Large go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Americafirst Large
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to under-perform the Americafirst Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Lifesmart Retirement is 3.15 times less risky than Americafirst Large. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Americafirst Large Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,336 in Americafirst Large Cap on September 25, 2024 and sell it today you would earn a total of 44.00 from holding Americafirst Large Cap or generate 3.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Lifesmart Retirement vs. Americafirst Large Cap
Performance |
Timeline |
Franklin Lifesmart |
Americafirst Large Cap |
Franklin Lifesmart and Americafirst Large Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Lifesmart and Americafirst Large
The main advantage of trading using opposite Franklin Lifesmart and Americafirst Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Americafirst Large 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 Americafirst Large will offset losses from the drop in Americafirst Large's 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 |
Americafirst Large vs. Americafirst Large Cap | Americafirst Large vs. Americafirst Monthly Risk On | Americafirst Large vs. Americafirst Tactical Alpha | Americafirst Large vs. Americafirst Tactical Alpha |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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