Correlation Between VanEck ETF and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both VanEck ETF 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 VanEck ETF and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck ETF Trust and Franklin Liberty Senior, you can compare the effects of market volatilities on VanEck ETF 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 VanEck ETF with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck ETF and Franklin Liberty.
Diversification Opportunities for VanEck ETF and Franklin Liberty
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VanEck and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding VanEck ETF Trust 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 VanEck ETF 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 VanEck ETF Trust 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 VanEck ETF i.e., VanEck ETF and Franklin Liberty go up and down completely randomly.
Pair Corralation between VanEck ETF and Franklin Liberty
Given the investment horizon of 90 days VanEck ETF is expected to generate 1.63 times less return on investment than Franklin Liberty. But when comparing it to its historical volatility, VanEck ETF Trust is 1.61 times less risky than Franklin Liberty. It trades about 0.62 of its potential returns per unit of risk. Franklin Liberty Senior is currently generating about 0.63 of returns per unit of risk over similar time horizon. If you would invest 2,421 in Franklin Liberty Senior on September 2, 2024 and sell it today you would earn a total of 24.00 from holding Franklin Liberty Senior or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck ETF Trust vs. Franklin Liberty Senior
Performance |
| Timeline |
| VanEck ETF Trust |
| Franklin Liberty Senior |
VanEck ETF and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck ETF and Franklin Liberty
The main advantage of trading using opposite VanEck ETF and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck ETF 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.| VanEck ETF vs. Janus Detroit Street | VanEck ETF vs. Janus Detroit Street | VanEck ETF vs. BlackRock AAA CLO | VanEck ETF vs. VanEck Investment Grade |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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