Correlation Between Franklin Liberty and IShares USD
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and IShares USD 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 Liberty and IShares USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Liberty Senior and iShares USD Green, you can compare the effects of market volatilities on Franklin Liberty and IShares USD 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 Liberty with a short position of IShares USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and IShares USD.
Diversification Opportunities for Franklin Liberty and IShares USD
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Franklin and IShares is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Senior and iShares USD Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares USD Green and Franklin Liberty 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 Liberty Senior are associated (or correlated) with IShares USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares USD Green has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and IShares USD go up and down completely randomly.
Pair Corralation between Franklin Liberty and IShares USD
Given the investment horizon of 90 days Franklin Liberty Senior is expected to generate 0.65 times more return on investment than IShares USD. However, Franklin Liberty Senior is 1.53 times less risky than IShares USD. It trades about 0.19 of its potential returns per unit of risk. iShares USD Green is currently generating about 0.05 per unit of risk. If you would invest 1,987 in Franklin Liberty Senior on August 26, 2024 and sell it today you would earn a total of 452.00 from holding Franklin Liberty Senior or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Liberty Senior vs. iShares USD Green
Performance |
| Timeline |
| Franklin Liberty Senior |
| iShares USD Green |
Franklin Liberty and IShares USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and IShares USD
The main advantage of trading using opposite Franklin Liberty and IShares USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, IShares USD 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 IShares USD will offset losses from the drop in IShares USD's long position.| Franklin Liberty vs. Franklin Liberty High | Franklin Liberty vs. Pacer Pacific Asset | Franklin Liberty vs. First Trust Senior | Franklin Liberty vs. Franklin Liberty International |
| IShares USD vs. Franklin Liberty High | IShares USD vs. Franklin Liberty Senior | IShares USD vs. Franklin Liberty Intermediate | IShares USD vs. Franklin Liberty Short |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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