Correlation Between Franklin Lifesmart and Alliancebernstein
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Alliancebernstein 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 Alliancebernstein 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 Alliancebernstein National Municipal, you can compare the effects of market volatilities on Franklin Lifesmart and Alliancebernstein 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 Alliancebernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Alliancebernstein.
Diversification Opportunities for Franklin Lifesmart and Alliancebernstein
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Alliancebernstein is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2045 and Alliancebernstein National Mun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein 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 Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Alliancebernstein go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Alliancebernstein
Assuming the 90 days horizon Franklin Lifesmart 2045 is expected to generate 0.92 times more return on investment than Alliancebernstein. However, Franklin Lifesmart 2045 is 1.09 times less risky than Alliancebernstein. It trades about -0.08 of its potential returns per unit of risk. Alliancebernstein National Municipal is currently generating about -0.23 per unit of risk. If you would invest 1,614 in Franklin Lifesmart 2045 on September 25, 2024 and sell it today you would lose (19.00) from holding Franklin Lifesmart 2045 or give up 1.18% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Franklin Lifesmart 2045 vs. Alliancebernstein National Mun
Performance |
Timeline |
Franklin Lifesmart 2045 |
Alliancebernstein |
Franklin Lifesmart and Alliancebernstein Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Lifesmart and Alliancebernstein
The main advantage of trading using opposite Franklin Lifesmart and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Alliancebernstein 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 Alliancebernstein will offset losses from the drop in Alliancebernstein's long position.Franklin Lifesmart vs. Calvert Moderate Allocation | Franklin Lifesmart vs. Strategic Allocation Moderate | Franklin Lifesmart vs. Qs Moderate Growth | Franklin Lifesmart vs. College Retirement Equities |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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