Correlation Between Franklin Lifesmart and Deutsche Real
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Deutsche Real 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 Deutsche Real 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 Deutsche Real Estate, you can compare the effects of market volatilities on Franklin Lifesmart and Deutsche Real 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 Deutsche Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Deutsche Real.
Diversification Opportunities for Franklin Lifesmart and Deutsche Real
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Deutsche is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Deutsche Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Real Estate 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 Deutsche Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Real Estate has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Deutsche Real go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Deutsche Real
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.14 times less return on investment than Deutsche Real. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 3.05 times less risky than Deutsche Real. It trades about 0.1 of its potential returns per unit of risk. Deutsche Real Estate is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,823 in Deutsche Real Estate on September 26, 2024 and sell it today you would earn a total of 339.00 from holding Deutsche Real Estate or generate 18.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Lifesmart Retirement vs. Deutsche Real Estate
Performance |
Timeline |
Franklin Lifesmart |
Deutsche Real Estate |
Franklin Lifesmart and Deutsche Real Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Lifesmart and Deutsche Real
The main advantage of trading using opposite Franklin Lifesmart and Deutsche Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Deutsche Real 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 Deutsche Real will offset losses from the drop in Deutsche Real's long position.Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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