Correlation Between Franklin Liberty and Virtus ETF
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and Virtus ETF 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 Virtus ETF 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 Virtus ETF Trust, you can compare the effects of market volatilities on Franklin Liberty and Virtus ETF 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 Virtus ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and Virtus ETF.
Diversification Opportunities for Franklin Liberty and Virtus ETF
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Virtus is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Senior and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust 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 Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and Virtus ETF go up and down completely randomly.
Pair Corralation between Franklin Liberty and Virtus ETF
Given the investment horizon of 90 days Franklin Liberty Senior is expected to generate 1.22 times more return on investment than Virtus ETF. However, Franklin Liberty is 1.22 times more volatile than Virtus ETF Trust. It trades about 0.18 of its potential returns per unit of risk. Virtus ETF Trust is currently generating about 0.2 per unit of risk. If you would invest 1,990 in Franklin Liberty Senior on August 23, 2024 and sell it today you would earn a total of 444.00 from holding Franklin Liberty Senior or generate 22.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Liberty Senior vs. Virtus ETF Trust
Performance |
| Timeline |
| Franklin Liberty Senior |
| Virtus ETF Trust |
Franklin Liberty and Virtus ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and Virtus ETF
The main advantage of trading using opposite Franklin Liberty and Virtus ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, Virtus ETF 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 Virtus ETF will offset losses from the drop in Virtus ETF's long position.| Franklin Liberty vs. Invesco Senior Loan | Franklin Liberty vs. First Trust Senior | Franklin Liberty vs. SPDR Bloomberg Short | Franklin Liberty vs. SPDR Bloomberg Investment |
| Virtus ETF vs. Franklin Liberty Senior | Virtus ETF vs. Virtus Newfleet Multi Sector | Virtus ETF vs. Pacer Pacific Asset | Virtus ETF vs. JPMorgan USD Emerging |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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