Correlation Between Gold and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Gold 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 Gold and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold And Precious and Franklin Lifesmart 2045, you can compare the effects of market volatilities on Gold 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 Gold with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold and Franklin Lifesmart.
Diversification Opportunities for Gold and Franklin Lifesmart
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gold and Franklin is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious 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 Gold 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 Gold And Precious 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 Gold i.e., Gold and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Gold and Franklin Lifesmart
Assuming the 90 days horizon Gold is expected to generate 1.24 times less return on investment than Franklin Lifesmart. In addition to that, Gold is 2.4 times more volatile than Franklin Lifesmart 2045. It trades about 0.03 of its total potential returns per unit of risk. Franklin Lifesmart 2045 is currently generating about 0.09 per unit of volatility. If you would invest 1,164 in Franklin Lifesmart 2045 on September 20, 2024 and sell it today you would earn a total of 404.00 from holding Franklin Lifesmart 2045 or generate 34.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
Gold And Precious vs. Franklin Lifesmart 2045
Performance |
Timeline |
Gold And Precious |
Franklin Lifesmart 2045 |
Gold and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gold and Franklin Lifesmart
The main advantage of trading using opposite Gold and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold 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.Gold vs. Near Term Tax Free | Gold vs. Us Global Investors | Gold vs. Global Resources Fund | Gold vs. Us Government Securities |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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