Correlation Between Franklin Liberty and IShares Fixed
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and IShares Fixed 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 Fixed 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 iShares Fixed Income, you can compare the effects of market volatilities on Franklin Liberty and IShares Fixed 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 Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and IShares Fixed.
Diversification Opportunities for Franklin Liberty and IShares Fixed
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and IShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Investment and iShares Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Fixed Income 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 IShares Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Fixed Income has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and IShares Fixed go up and down completely randomly.
Pair Corralation between Franklin Liberty and IShares Fixed
Given the investment horizon of 90 days Franklin Liberty Investment is expected to under-perform the IShares Fixed. In addition to that, Franklin Liberty is 1.95 times more volatile than iShares Fixed Income. It trades about -0.05 of its total potential returns per unit of risk. iShares Fixed Income is currently generating about -0.01 per unit of volatility. If you would invest 8,788 in iShares Fixed Income on September 3, 2024 and sell it today you would lose (7.00) from holding iShares Fixed Income or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Liberty Investment vs. iShares Fixed Income
Performance |
| Timeline |
| Franklin Liberty Inv |
| iShares Fixed Income |
Franklin Liberty and IShares Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and IShares Fixed
The main advantage of trading using opposite Franklin Liberty and IShares Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, IShares Fixed 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 Fixed will offset losses from the drop in IShares Fixed's long position.| Franklin Liberty vs. iShares iBoxx High | Franklin Liberty vs. iShares 1 3 Year | Franklin Liberty vs. iShares TIPS Bond | Franklin Liberty vs. iShares 7 10 Year |
| IShares Fixed vs. iShares iBoxx High | IShares Fixed vs. iShares 1 3 Year | IShares Fixed vs. iShares TIPS Bond | IShares Fixed vs. iShares 7 10 Year |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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