Correlation Between Boeing and Franklin Lifesmart

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

By analyzing existing cross correlation between The Boeing and Franklin Lifesmart 2050, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Franklin Lifesmart.

Diversification Opportunities for Boeing and Franklin Lifesmart

0.55

Correlation Coefficient

Boeing  Franklin Lifesmart

Very weak diversification

The 3 months correlation between Boeing and Franklin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Franklin Lifesmart 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2050 and Boeing 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 The Boeing 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 2050 has no effect on the direction of Boeing i.e., Boeing and Franklin Lifesmart go up and down completely randomly.

Pair Corralation between Boeing and Franklin Lifesmart

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Franklin Lifesmart. In addition to that, Boeing is 2.69 times more volatile than Franklin Lifesmart 2050. It trades about 0.0 of its total potential returns per unit of risk. Franklin Lifesmart 2050 is currently generating about 0.02 per unit of volatility. If you would invest  1,545  in Franklin Lifesmart 2050 on December 28, 2024 and sell it today you would earn a total of  13.00  from holding Franklin Lifesmart 2050 or generate 0.84% return on investment over 90 days.

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

The Boeing  vs.  Franklin Lifesmart 2050

Boeing

Risk-Adjusted Performance

Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Franklin Lifesmart 2050

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Lifesmart 2050 are ranked lower than 1 (%) 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 Boeing and Franklin Lifesmart

The main advantage of trading using opposite Boeing and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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 The Boeing and Franklin Lifesmart 2050 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.