Correlation Between Franklin Liberty and Invesco Fundamental
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and Invesco Fundamental 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 Invesco Fundamental 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 Invesco Fundamental Investment, you can compare the effects of market volatilities on Franklin Liberty and Invesco Fundamental 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 Invesco Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and Invesco Fundamental.
Diversification Opportunities for Franklin Liberty and Invesco Fundamental
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Invesco is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Investment and Invesco Fundamental Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Fundamental 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 Invesco Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Fundamental has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and Invesco Fundamental go up and down completely randomly.
Pair Corralation between Franklin Liberty and Invesco Fundamental
Given the investment horizon of 90 days Franklin Liberty Investment is expected to generate 1.2 times more return on investment than Invesco Fundamental. However, Franklin Liberty is 1.2 times more volatile than Invesco Fundamental Investment. It trades about 0.09 of its potential returns per unit of risk. Invesco Fundamental Investment is currently generating about 0.1 per unit of risk. If you would invest 2,052 in Franklin Liberty Investment on August 24, 2024 and sell it today you would earn a total of 80.00 from holding Franklin Liberty Investment or generate 3.9% 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. Invesco Fundamental Investment
Performance |
| Timeline |
| Franklin Liberty Inv |
| Invesco Fundamental |
Franklin Liberty and Invesco Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and Invesco Fundamental
The main advantage of trading using opposite Franklin Liberty and Invesco Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, Invesco Fundamental 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 Invesco Fundamental will offset losses from the drop in Invesco Fundamental's long position.| Franklin Liberty vs. SPDR Barclays Short | Franklin Liberty vs. SPDR Bloomberg Emerging | Franklin Liberty vs. SPDR Barclays Long | Franklin Liberty vs. SPDR Barclays Short |
| Invesco Fundamental vs. SPDR Barclays Short | Invesco Fundamental vs. SPDR Bloomberg Emerging | Invesco Fundamental vs. SPDR Barclays Long | Invesco Fundamental vs. SPDR Barclays 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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