Correlation Between Copeland Risk and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Copeland Risk 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 Copeland Risk and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copeland Risk Managed and Franklin Lifesmart 2045, you can compare the effects of market volatilities on Copeland Risk 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 Copeland Risk with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copeland Risk and Franklin Lifesmart.
Diversification Opportunities for Copeland Risk and Franklin Lifesmart
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Copeland and Franklin is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Copeland Risk Managed 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 Copeland Risk 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 Copeland Risk Managed 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 Copeland Risk i.e., Copeland Risk and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Copeland Risk and Franklin Lifesmart
Assuming the 90 days horizon Copeland Risk Managed is expected to under-perform the Franklin Lifesmart. In addition to that, Copeland Risk is 3.43 times more volatile than Franklin Lifesmart 2045. It trades about -0.3 of its total potential returns per unit of risk. Franklin Lifesmart 2045 is currently generating about -0.28 per unit of volatility. If you would invest 1,618 in Franklin Lifesmart 2045 on October 2, 2024 and sell it today you would lose (80.00) from holding Franklin Lifesmart 2045 or give up 4.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Copeland Risk Managed vs. Franklin Lifesmart 2045
Performance |
Timeline |
Copeland Risk Managed |
Franklin Lifesmart 2045 |
Copeland Risk and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Copeland Risk and Franklin Lifesmart
The main advantage of trading using opposite Copeland Risk and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copeland Risk 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.Copeland Risk vs. Copeland Risk Managed | Copeland Risk vs. Copeland Risk Managed | Copeland Risk vs. Copeland International Small | Copeland Risk vs. Copeland Smid Cap |
Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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