Correlation Between Xtrackers California and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Xtrackers California 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 Xtrackers California and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers California Municipal and Franklin Liberty Ultra, you can compare the effects of market volatilities on Xtrackers California 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 Xtrackers California with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and Franklin Liberty.
Diversification Opportunities for Xtrackers California and Franklin Liberty
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xtrackers and Franklin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and Franklin Liberty Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Ultra and Xtrackers California 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 Xtrackers California Municipal 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 Ultra has no effect on the direction of Xtrackers California i.e., Xtrackers California and Franklin Liberty go up and down completely randomly.
Pair Corralation between Xtrackers California and Franklin Liberty
Allowing for the 90-day total investment horizon Xtrackers California is expected to generate 3.39 times less return on investment than Franklin Liberty. In addition to that, Xtrackers California is 2.13 times more volatile than Franklin Liberty Ultra. It trades about 0.03 of its total potential returns per unit of risk. Franklin Liberty Ultra is currently generating about 0.18 per unit of volatility. If you would invest 2,371 in Franklin Liberty Ultra on November 3, 2024 and sell it today you would earn a total of 126.50 from holding Franklin Liberty Ultra or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers California Municipal vs. Franklin Liberty Ultra
Performance |
| Timeline |
| Xtrackers California |
| Franklin Liberty Ultra |
Xtrackers California and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and Franklin Liberty
The main advantage of trading using opposite Xtrackers California and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California 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.| Xtrackers California vs. VanEck Vectors Moodys | Xtrackers California vs. Valued Advisers Trust | Xtrackers California vs. Principal Exchange Traded Funds | Xtrackers California vs. Vanguard ESG Corporate |
| Franklin Liberty vs. VanEck Vectors Moodys | Franklin Liberty vs. Valued Advisers Trust | Franklin Liberty vs. Xtrackers California Municipal | Franklin Liberty vs. Principal Exchange Traded Funds |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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