Correlation Between Franklin Liberty and IShares BBB
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and IShares BBB 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 BBB 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 BBB Rated, you can compare the effects of market volatilities on Franklin Liberty and IShares BBB 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 BBB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and IShares BBB.
Diversification Opportunities for Franklin Liberty and IShares BBB
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Investment and iShares BBB Rated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares BBB Rated 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 BBB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares BBB Rated has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and IShares BBB go up and down completely randomly.
Pair Corralation between Franklin Liberty and IShares BBB
Given the investment horizon of 90 days Franklin Liberty is expected to generate 1.95 times less return on investment than IShares BBB. In addition to that, Franklin Liberty is 1.16 times more volatile than iShares BBB Rated. It trades about 0.02 of its total potential returns per unit of risk. iShares BBB Rated is currently generating about 0.04 per unit of volatility. If you would invest 8,505 in iShares BBB Rated on October 25, 2024 and sell it today you would earn a total of 17.00 from holding iShares BBB Rated or generate 0.2% 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 Investment vs. iShares BBB Rated
Performance |
| Timeline |
| Franklin Liberty Inv |
| iShares BBB Rated |
Franklin Liberty and IShares BBB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and IShares BBB
The main advantage of trading using opposite Franklin Liberty and IShares BBB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, IShares BBB 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 BBB will offset losses from the drop in IShares BBB's long position.| Franklin Liberty vs. Franklin Liberty Short | Franklin Liberty vs. Goldman Sachs Access | Franklin Liberty vs. Franklin Templeton ETF | Franklin Liberty vs. Franklin Liberty Federal |
| IShares BBB vs. iShares BB Rated | IShares BBB vs. iShares Aaa | IShares BBB vs. iShares Edge Investment | IShares BBB vs. BlackRock Intermediate Muni |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Stocks Directory Find actively traded stocks across global markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |