Correlation Between Guggenheim Managed and Franklin Lifesmart

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

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

Diversification Opportunities for Guggenheim Managed and Franklin Lifesmart

-0.35

Correlation Coefficient

Guggenheim Managed  Franklin Lifesmart

Very good diversification

The 3 months correlation between Guggenheim and Franklin is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Managed Futures and Franklin Lifesmart 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2045 and Guggenheim Managed 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 Guggenheim Managed Futures are associated (or correlated) with Franklin Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2045 has no effect on the direction of Guggenheim Managed i.e., Guggenheim Managed and Franklin Lifesmart go up and down completely randomly.

Pair Corralation between Guggenheim Managed and Franklin Lifesmart

Assuming the 90 days horizon Guggenheim Managed Futures is expected to under-perform the Franklin Lifesmart. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guggenheim Managed Futures is 1.12 times less risky than Franklin Lifesmart. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Franklin Lifesmart 2045 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,520  in Franklin Lifesmart 2045 on October 25, 2024 and sell it today you would earn a total of  9.00  from holding Franklin Lifesmart 2045 or generate 0.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Guggenheim Managed Futures  vs.  Franklin Lifesmart 2045

Guggenheim Managed

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Managed Futures are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Guggenheim Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Lifesmart 2045

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Lifesmart 2045 are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Guggenheim Managed and Franklin Lifesmart

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

The idea behind Guggenheim Managed Futures and Franklin Lifesmart 2045 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.