Correlation Between Franklin Lifesmart and Franklin Double

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

By analyzing existing cross correlation between Franklin Lifesmart 2045 and Franklin Double Tax Free, you can compare the effects of market volatilities on Franklin Lifesmart and Franklin Double 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 Franklin Lifesmart with a short position of Franklin Double. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Franklin Double.

Diversification Opportunities for Franklin Lifesmart and Franklin Double

0.0

Correlation Coefficient

Franklin Lifesmart  Franklin Double

Pay attention - limited upside

The 3 months correlation between Franklin and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2045 and Franklin Double Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Double Tax and Franklin Lifesmart 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 Franklin Lifesmart 2045 are associated (or correlated) with Franklin Double. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Double Tax has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Franklin Double go up and down completely randomly.

Pair Corralation between Franklin Lifesmart and Franklin Double

If you would invest  1,486  in Franklin Lifesmart 2045 on October 4, 2024 and sell it today you would lose (5.00) from holding Franklin Lifesmart 2045 or give up 0.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Franklin Lifesmart 2045  vs.  Franklin Double Tax Free

Franklin Lifesmart 2045

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Lifesmart 2045 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Franklin Lifesmart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Double Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Double Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Franklin Double is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Lifesmart and Franklin Double

The main advantage of trading using opposite Franklin Lifesmart and Franklin Double positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Franklin Double 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 Double will offset losses from the drop in Franklin Double's long position.

The idea behind Franklin Lifesmart 2045 and Franklin Double Tax Free 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.