Correlation Between Calvert Moderate and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Calvert Moderate 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 Calvert Moderate and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert Moderate Allocation and Franklin Lifesmart 2030, you can compare the effects of market volatilities on Calvert Moderate 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 Calvert Moderate with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Moderate and Franklin Lifesmart.
Diversification Opportunities for Calvert Moderate and Franklin Lifesmart
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Calvert and Franklin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Moderate Allocation 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 Calvert Moderate 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 Calvert Moderate Allocation 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 Calvert Moderate i.e., Calvert Moderate and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Calvert Moderate and Franklin Lifesmart
Assuming the 90 days horizon Calvert Moderate Allocation is expected to under-perform the Franklin Lifesmart. In addition to that, Calvert Moderate is 1.31 times more volatile than Franklin Lifesmart 2030. It trades about -0.36 of its total potential returns per unit of risk. Franklin Lifesmart 2030 is currently generating about -0.35 per unit of volatility. If you would invest 1,418 in Franklin Lifesmart 2030 on October 5, 2024 and sell it today you would lose (54.00) from holding Franklin Lifesmart 2030 or give up 3.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Calvert Moderate Allocation vs. Franklin Lifesmart 2030
Performance |
Timeline |
Calvert Moderate All |
Franklin Lifesmart 2030 |
Calvert Moderate and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Calvert Moderate and Franklin Lifesmart
The main advantage of trading using opposite Calvert Moderate and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Moderate 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.Calvert Moderate vs. American Funds American | Calvert Moderate vs. American Funds American | Calvert Moderate vs. American Balanced | Calvert Moderate vs. American Balanced Fund |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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