Correlation Between Franklin Lifesmart and Qs Us

Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Qs Us 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 Qs Us 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 Qs Small Capitalization, you can compare the effects of market volatilities on Franklin Lifesmart and Qs Us 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 Qs Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Qs Us.

Diversification Opportunities for Franklin Lifesmart and Qs Us

0.75

Correlation Coefficient

Franklin Lifesmart  Qs Us

Poor diversification

The 3 months correlation between Franklin and LMBMX is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2045 and Qs Small Capitalization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Small Capitalization 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 Qs Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Small Capitalization has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Qs Us go up and down completely randomly.

Pair Corralation between Franklin Lifesmart and Qs Us

Assuming the 90 days horizon Franklin Lifesmart 2045 is expected to generate 0.55 times more return on investment than Qs Us. However, Franklin Lifesmart 2045 is 1.83 times less risky than Qs Us. It trades about 0.07 of its potential returns per unit of risk. Qs Small Capitalization is currently generating about 0.03 per unit of risk. If you would invest  1,216  in Franklin Lifesmart 2045 on October 4, 2024 and sell it today you would earn a total of  322.00  from holding Franklin Lifesmart 2045 or generate 26.48% return on investment over 90 days.

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

Franklin Lifesmart 2045  vs.  Qs Small Capitalization

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-looking indicators, Franklin Lifesmart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qs Small Capitalization

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qs Small Capitalization has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Qs Us 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 Qs Us

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

The idea behind Franklin Lifesmart 2045 and Qs Small Capitalization 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.