Correlation Between Astar and Franklin Lifesmart

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

By analyzing existing cross correlation between Astar and Franklin Lifesmart 2030, you can compare the effects of market volatilities on Astar 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 Astar with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Franklin Lifesmart.

Diversification Opportunities for Astar and Franklin Lifesmart

0.36

Correlation Coefficient

Astar  Franklin Lifesmart

Weak diversification

The 3 months correlation between Astar and Franklin is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Franklin Lifesmart 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2030 and Astar 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 Astar 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 2030 has no effect on the direction of Astar i.e., Astar and Franklin Lifesmart go up and down completely randomly.

Pair Corralation between Astar and Franklin Lifesmart

Assuming the 90 days trading horizon Astar is expected to generate 15.79 times more return on investment than Franklin Lifesmart. However, Astar is 15.79 times more volatile than Franklin Lifesmart 2030. It trades about 0.03 of its potential returns per unit of risk. Franklin Lifesmart 2030 is currently generating about 0.09 per unit of risk. If you would invest  5.70  in Astar on October 25, 2024 and sell it today you would lose (0.41) from holding Astar or give up 7.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	60.32%
Values	Daily Returns

Astar  vs.  Franklin Lifesmart 2030

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Franklin Lifesmart 2030

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Lifesmart 2030 are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Astar and Franklin Lifesmart

The main advantage of trading using opposite Astar and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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 Astar and Franklin Lifesmart 2030 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..