Correlation Between Franklin Liberty and IShares 3
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and IShares 3 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 3 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Liberty Treasury and iShares 3 7 Year, you can compare the effects of market volatilities on Franklin Liberty and IShares 3 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 3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and IShares 3.
Diversification Opportunities for Franklin Liberty and IShares 3
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 Treasury and iShares 3 7 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 3 7 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 Treasury are associated (or correlated) with IShares 3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 3 7 has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and IShares 3 go up and down completely randomly.
Pair Corralation between Franklin Liberty and IShares 3
Given the investment horizon of 90 days Franklin Liberty is expected to generate 1.43 times less return on investment than IShares 3. In addition to that, Franklin Liberty is 1.16 times more volatile than iShares 3 7 Year. It trades about 0.02 of its total potential returns per unit of risk. iShares 3 7 Year is currently generating about 0.03 per unit of volatility. If you would invest 10,989 in iShares 3 7 Year on August 24, 2024 and sell it today you would earn a total of 607.00 from holding iShares 3 7 Year or generate 5.52% 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 Treasury vs. iShares 3 7 Year
Performance |
| Timeline |
| Franklin Liberty Treasury |
| iShares 3 7 |
Franklin Liberty and IShares 3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and IShares 3
The main advantage of trading using opposite Franklin Liberty and IShares 3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, IShares 3 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 3 will offset losses from the drop in IShares 3's long position.| Franklin Liberty vs. Franklin Templeton ETF | Franklin Liberty vs. Franklin Liberty Investment | Franklin Liberty vs. Franklin Liberty International | Franklin Liberty vs. Franklin Liberty Intermediate |
| IShares 3 vs. iShares 10 20 Year | IShares 3 vs. iShares 7 10 Year | IShares 3 vs. iShares 1 3 Year | IShares 3 vs. iShares MBS ETF |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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