Correlation Between BlackRock Latin and Franklin Libertyshares
Can any of the company-specific risk be diversified away by investing in both BlackRock Latin and Franklin Libertyshares 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 BlackRock Latin and Franklin Libertyshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock Latin American and Franklin Libertyshares ICAV, you can compare the effects of market volatilities on BlackRock Latin and Franklin Libertyshares 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 BlackRock Latin with a short position of Franklin Libertyshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Latin and Franklin Libertyshares.
Diversification Opportunities for BlackRock Latin and Franklin Libertyshares
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BlackRock and Franklin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Latin American and Franklin Libertyshares ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Libertyshares and BlackRock Latin 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 BlackRock Latin American are associated (or correlated) with Franklin Libertyshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Libertyshares has no effect on the direction of BlackRock Latin i.e., BlackRock Latin and Franklin Libertyshares go up and down completely randomly.
Pair Corralation between BlackRock Latin and Franklin Libertyshares
Assuming the 90 days trading horizon BlackRock Latin American is expected to under-perform the Franklin Libertyshares. In addition to that, BlackRock Latin is 1.72 times more volatile than Franklin Libertyshares ICAV. It trades about -0.23 of its total potential returns per unit of risk. Franklin Libertyshares ICAV is currently generating about 0.11 per unit of volatility. If you would invest 2,806 in Franklin Libertyshares ICAV on September 13, 2024 and sell it today you would earn a total of 50.00 from holding Franklin Libertyshares ICAV or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BlackRock Latin American vs. Franklin Libertyshares ICAV
Performance |
| Timeline |
| BlackRock Latin American |
| Franklin Libertyshares |
BlackRock Latin and Franklin Libertyshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock Latin and Franklin Libertyshares
The main advantage of trading using opposite BlackRock Latin and Franklin Libertyshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Latin position performs unexpectedly, Franklin Libertyshares 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 Libertyshares will offset losses from the drop in Franklin Libertyshares' long position.| BlackRock Latin vs. Aberdeen New India | BlackRock Latin vs. VinaCapital Vietnam Opportunity | BlackRock Latin vs. Downing Strategic Micro Cap | BlackRock Latin vs. CT Private Equity |
| Franklin Libertyshares vs. Franklin LibertyQ Global | Franklin Libertyshares vs. Franklin Libertyshares ICAV | Franklin Libertyshares vs. Franklin FTSE Asia | Franklin Libertyshares vs. Franklin FTSE Brazil |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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