Correlation Between Ab Global and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Ab Global and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Bond and Franklin Lifesmart 2045, you can compare the effects of market volatilities on Ab Global 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 Ab Global with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Franklin Lifesmart.
Diversification Opportunities for Ab Global and Franklin Lifesmart
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ANAGX and Franklin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Bond 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 Ab Global 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 Ab Global Bond 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 Ab Global i.e., Ab Global and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Ab Global and Franklin Lifesmart
Assuming the 90 days horizon Ab Global Bond is expected to generate 0.33 times more return on investment than Franklin Lifesmart. However, Ab Global Bond is 3.01 times less risky than Franklin Lifesmart. It trades about -0.19 of its potential returns per unit of risk. Franklin Lifesmart 2045 is currently generating about -0.13 per unit of risk. If you would invest 692.00 in Ab Global Bond on September 24, 2024 and sell it today you would lose (6.00) from holding Ab Global Bond or give up 0.87% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Ab Global Bond vs. Franklin Lifesmart 2045
Performance |
Timeline |
Ab Global Bond |
Franklin Lifesmart 2045 |
Ab Global and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab Global and Franklin Lifesmart
The main advantage of trading using opposite Ab Global and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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.Ab Global vs. Ab Global E | Ab Global vs. Ab Global E | Ab Global vs. Ab Global E | Ab Global vs. Ab Minnesota Portfolio |
Franklin Lifesmart vs. Ab Global Bond | Franklin Lifesmart vs. Pace High Yield | Franklin Lifesmart vs. T Rowe Price | Franklin Lifesmart vs. Alliancebernstein National Municipal |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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