Correlation Between Franklin Libertyshares and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both Franklin Libertyshares and Franklin FTSE 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 Franklin Libertyshares and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Libertyshares ICAV and Franklin FTSE Asia, you can compare the effects of market volatilities on Franklin Libertyshares and Franklin FTSE 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 Franklin Libertyshares with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Libertyshares and Franklin FTSE.
Diversification Opportunities for Franklin Libertyshares and Franklin FTSE
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Franklin is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Libertyshares ICAV and Franklin FTSE Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Asia and Franklin Libertyshares 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 Franklin Libertyshares ICAV are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Asia has no effect on the direction of Franklin Libertyshares i.e., Franklin Libertyshares and Franklin FTSE go up and down completely randomly.
Pair Corralation between Franklin Libertyshares and Franklin FTSE
Assuming the 90 days trading horizon Franklin Libertyshares is expected to generate 2.18 times less return on investment than Franklin FTSE. But when comparing it to its historical volatility, Franklin Libertyshares ICAV is 1.12 times less risky than Franklin FTSE. It trades about 0.01 of its potential returns per unit of risk. Franklin FTSE Asia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,377 in Franklin FTSE Asia on September 3, 2024 and sell it today you would earn a total of 84.00 from holding Franklin FTSE Asia or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Libertyshares ICAV vs. Franklin FTSE Asia
Performance |
| Timeline |
| Franklin Libertyshares |
| Franklin FTSE Asia |
Franklin Libertyshares and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Libertyshares and Franklin FTSE
The main advantage of trading using opposite Franklin Libertyshares and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Libertyshares position performs unexpectedly, Franklin FTSE 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 FTSE will offset losses from the drop in Franklin FTSE's long position.The idea behind Franklin Libertyshares ICAV and Franklin FTSE Asia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Franklin FTSE vs. Franklin LibertyQ Global | Franklin FTSE vs. Franklin Libertyshares ICAV | Franklin FTSE vs. Franklin FTSE Brazil | Franklin FTSE vs. Franklin LibertyQ AC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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