Correlation Between Franklin Lifesmart and Capital World
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Capital World 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 Capital World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart Retirement and Capital World Bond, you can compare the effects of market volatilities on Franklin Lifesmart and Capital World 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Capital World.
Diversification Opportunities for Franklin Lifesmart and Capital World
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Capital is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Capital World Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Bond 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 Retirement are associated (or correlated) with Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Bond has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Capital World go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Capital World
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 1.09 times more return on investment than Capital World. However, Franklin Lifesmart is 1.09 times more volatile than Capital World Bond. It trades about 0.01 of its potential returns per unit of risk. Capital World Bond is currently generating about -0.02 per unit of risk. If you would invest 1,049 in Franklin Lifesmart Retirement on December 1, 2024 and sell it today you would earn a total of 1.00 from holding Franklin Lifesmart Retirement or generate 0.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Lifesmart Retirement vs. Capital World Bond
Performance |
Timeline |
Franklin Lifesmart |
Capital World Bond |
Franklin Lifesmart and Capital World Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Lifesmart and Capital World
The main advantage of trading using opposite Franklin Lifesmart and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.Franklin Lifesmart vs. Goldman Sachs Emerging | Franklin Lifesmart vs. Rbc Emerging Markets | Franklin Lifesmart vs. Doubleline Emerging Markets | Franklin Lifesmart vs. Calvert Developed Market |
Capital World vs. Crafword Dividend Growth | Capital World vs. The Hartford International | Capital World vs. Rational Defensive Growth | Capital World vs. Touchstone Sands Capital |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |