Correlation Between Baird Smallmid and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Baird Smallmid 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 Baird Smallmid and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Smallmid Cap and Franklin Lifesmart 2045, you can compare the effects of market volatilities on Baird Smallmid 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 Baird Smallmid with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Smallmid and Franklin Lifesmart.
Diversification Opportunities for Baird Smallmid and Franklin Lifesmart
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Baird and Franklin is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid Cap 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 Baird Smallmid 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 Baird Smallmid Cap 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 Baird Smallmid i.e., Baird Smallmid and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Baird Smallmid and Franklin Lifesmart
Assuming the 90 days horizon Baird Smallmid Cap is expected to generate 1.6 times more return on investment than Franklin Lifesmart. However, Baird Smallmid is 1.6 times more volatile than Franklin Lifesmart 2045. It trades about 0.07 of its potential returns per unit of risk. Franklin Lifesmart 2045 is currently generating about -0.07 per unit of risk. If you would invest 1,664 in Baird Smallmid Cap on October 6, 2024 and sell it today you would earn a total of 54.00 from holding Baird Smallmid Cap or generate 3.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Baird Smallmid Cap vs. Franklin Lifesmart 2045
Performance |
Timeline |
Baird Smallmid Cap |
Franklin Lifesmart 2045 |
Baird Smallmid and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baird Smallmid and Franklin Lifesmart
The main advantage of trading using opposite Baird Smallmid and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Smallmid 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.Baird Smallmid vs. Origin Emerging Markets | Baird Smallmid vs. Calvert Emerging Markets | Baird Smallmid vs. Black Oak Emerging | Baird Smallmid vs. Franklin Emerging Market |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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