Correlation Between Invesco Senior and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Invesco Senior and Franklin Liberty 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 Invesco Senior and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Senior Loan and Franklin Liberty Senior, you can compare the effects of market volatilities on Invesco Senior and Franklin Liberty 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 Invesco Senior with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Senior and Franklin Liberty.
Diversification Opportunities for Invesco Senior and Franklin Liberty
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Senior Loan and Franklin Liberty Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Senior and Invesco Senior 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 Invesco Senior Loan are associated (or correlated) with Franklin Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Liberty Senior has no effect on the direction of Invesco Senior i.e., Invesco Senior and Franklin Liberty go up and down completely randomly.
Pair Corralation between Invesco Senior and Franklin Liberty
Given the investment horizon of 90 days Invesco Senior Loan is expected to generate 1.24 times more return on investment than Franklin Liberty. However, Invesco Senior is 1.24 times more volatile than Franklin Liberty Senior. It trades about 0.26 of its potential returns per unit of risk. Franklin Liberty Senior is currently generating about 0.3 per unit of risk. If you would invest 1,919 in Invesco Senior Loan on August 27, 2024 and sell it today you would earn a total of 190.00 from holding Invesco Senior Loan or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Senior Loan vs. Franklin Liberty Senior
Performance |
| Timeline |
| Invesco Senior Loan |
| Franklin Liberty Senior |
Invesco Senior and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Senior and Franklin Liberty
The main advantage of trading using opposite Invesco Senior and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Senior position performs unexpectedly, Franklin Liberty 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 Liberty will offset losses from the drop in Franklin Liberty's long position.| Invesco Senior vs. First Trust SSI | Invesco Senior vs. Franklin Liberty Senior | Invesco Senior vs. SPDR Bloomberg Convertible | Invesco Senior vs. Fidelity Preferred Securities |
| Franklin Liberty vs. Franklin Liberty High | Franklin Liberty vs. Pacer Pacific Asset | Franklin Liberty vs. First Trust Senior | Franklin Liberty vs. Franklin Liberty International |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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