Correlation Between Franklin Liberty and Schwab 5
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and Schwab 5 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 Schwab 5 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 Schwab 5 10 Year, you can compare the effects of market volatilities on Franklin Liberty and Schwab 5 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 Schwab 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and Schwab 5.
Diversification Opportunities for Franklin Liberty and Schwab 5
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Schwab is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Investment and Schwab 5 10 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab 5 10 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 Schwab 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab 5 10 has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and Schwab 5 go up and down completely randomly.
Pair Corralation between Franklin Liberty and Schwab 5
Given the investment horizon of 90 days Franklin Liberty Investment is expected to generate 1.04 times more return on investment than Schwab 5. However, Franklin Liberty is 1.04 times more volatile than Schwab 5 10 Year. It trades about 0.07 of its potential returns per unit of risk. Schwab 5 10 Year is currently generating about 0.06 per unit of risk. If you would invest 2,143 in Franklin Liberty Investment on August 30, 2024 and sell it today you would earn a total of 15.00 from holding Franklin Liberty Investment or generate 0.7% 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. Schwab 5 10 Year
Performance |
| Timeline |
| Franklin Liberty Inv |
| Schwab 5 10 |
Franklin Liberty and Schwab 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and Schwab 5
The main advantage of trading using opposite Franklin Liberty and Schwab 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, Schwab 5 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 Schwab 5 will offset losses from the drop in Schwab 5'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 |
| Schwab 5 vs. Schwab 1 5 Year | Schwab 5 vs. Schwab Long Term Treasury | Schwab 5 vs. Schwab Intermediate Term Treasury | Schwab 5 vs. Schwab Short Term Treasury |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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