Correlation Between ETRACS Monthly and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both ETRACS Monthly 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 ETRACS Monthly and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS Monthly Pay and Franklin Liberty Ultra, you can compare the effects of market volatilities on ETRACS Monthly 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 ETRACS Monthly with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and Franklin Liberty.
Diversification Opportunities for ETRACS Monthly and Franklin Liberty
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETRACS and Franklin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay 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 ETRACS Monthly 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 ETRACS Monthly Pay 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 ETRACS Monthly i.e., ETRACS Monthly and Franklin Liberty go up and down completely randomly.
Pair Corralation between ETRACS Monthly and Franklin Liberty
Given the investment horizon of 90 days ETRACS Monthly Pay is expected to generate 6.57 times more return on investment than Franklin Liberty. However, ETRACS Monthly is 6.57 times more volatile than Franklin Liberty Ultra. It trades about 0.21 of its potential returns per unit of risk. Franklin Liberty Ultra is currently generating about 0.11 per unit of risk. If you would invest 1,971 in ETRACS Monthly Pay on September 3, 2024 and sell it today you would earn a total of 89.00 from holding ETRACS Monthly Pay or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS Monthly Pay vs. Franklin Liberty Ultra
Performance |
| Timeline |
| ETRACS Monthly Pay |
| Franklin Liberty Ultra |
ETRACS Monthly and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS Monthly and Franklin Liberty
The main advantage of trading using opposite ETRACS Monthly and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly 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.| ETRACS Monthly vs. ETRACS Quarterly Pay | ETRACS Monthly vs. Simplify Volatility Premium | ETRACS Monthly vs. ETRACS Monthly Pay | ETRACS Monthly vs. iShares Trust |
| Franklin Liberty vs. Valued Advisers Trust | Franklin Liberty vs. Columbia Diversified Fixed | Franklin Liberty vs. Principal Exchange Traded Funds | Franklin Liberty vs. Doubleline Etf Trust |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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