Correlation Between Franklin Liberty and Fieldstone UVA
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and Fieldstone UVA 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 Fieldstone UVA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Liberty Investment and Fieldstone UVA Unconstrained, you can compare the effects of market volatilities on Franklin Liberty and Fieldstone UVA 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 Fieldstone UVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and Fieldstone UVA.
Diversification Opportunities for Franklin Liberty and Fieldstone UVA
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Fieldstone is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Investment and Fieldstone UVA Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fieldstone UVA Uncon 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 Investment are associated (or correlated) with Fieldstone UVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fieldstone UVA Uncon has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and Fieldstone UVA go up and down completely randomly.
Pair Corralation between Franklin Liberty and Fieldstone UVA
Given the investment horizon of 90 days Franklin Liberty Investment is expected to generate 0.41 times more return on investment than Fieldstone UVA. However, Franklin Liberty Investment is 2.46 times less risky than Fieldstone UVA. It trades about -0.08 of its potential returns per unit of risk. Fieldstone UVA Unconstrained is currently generating about -0.08 per unit of risk. If you would invest 2,139 in Franklin Liberty Investment on October 26, 2024 and sell it today you would lose (25.50) from holding Franklin Liberty Investment or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Liberty Investment vs. Fieldstone UVA Unconstrained
Performance |
| Timeline |
| Franklin Liberty Inv |
| Fieldstone UVA Uncon |
Franklin Liberty and Fieldstone UVA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and Fieldstone UVA
The main advantage of trading using opposite Franklin Liberty and Fieldstone UVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, Fieldstone UVA 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 Fieldstone UVA will offset losses from the drop in Fieldstone UVA's long position.| Franklin Liberty vs. iShares iBonds Dec | Franklin Liberty vs. iShares 25 Year | Franklin Liberty vs. Aquagold International | Franklin Liberty vs. Barloworld Ltd ADR |
| Fieldstone UVA vs. FlexShares Core Select | Fieldstone UVA vs. Franklin Liberty Investment | Fieldstone UVA vs. Hartford Total Return |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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