Correlation Between Usa Mutuals and Franklin Lifesmart

Can any of the company-specific risk be diversified away by investing in both Usa Mutuals 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 Usa Mutuals and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Usa Mutuals Navigator and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Usa Mutuals 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 Usa Mutuals with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usa Mutuals and Franklin Lifesmart.

Diversification Opportunities for Usa Mutuals and Franklin Lifesmart

0.12

Correlation Coefficient

Usa Mutuals  Franklin Lifesmart

Average diversification

The 3 months correlation between Usa and Franklin is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Usa Mutuals Navigator and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Usa Mutuals 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 Usa Mutuals Navigator 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 Usa Mutuals i.e., Usa Mutuals and Franklin Lifesmart go up and down completely randomly.

Pair Corralation between Usa Mutuals and Franklin Lifesmart

Assuming the 90 days horizon Usa Mutuals Navigator is expected to generate 1.37 times more return on investment than Franklin Lifesmart. However, Usa Mutuals is 1.37 times more volatile than Franklin Lifesmart Retirement. It trades about -0.05 of its potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about -0.08 per unit of risk. If you would invest  2,729  in Usa Mutuals Navigator on September 20, 2024 and sell it today you would lose (39.00) from holding Usa Mutuals Navigator or give up 1.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Usa Mutuals Navigator  vs.  Franklin Lifesmart Retirement

Usa Mutuals Navigator

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Usa Mutuals Navigator has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Usa Mutuals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Lifesmart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Lifesmart Retirement has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Franklin Lifesmart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Usa Mutuals and Franklin Lifesmart

The main advantage of trading using opposite Usa Mutuals and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usa Mutuals 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.

The idea behind Usa Mutuals Navigator and Franklin Lifesmart Retirement pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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..