Correlation Between Franklin Liberty and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and Franklin Liberty 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 Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Liberty Federal and Franklin Liberty High, you can compare the effects of market volatilities on Franklin Liberty and Franklin Liberty 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 Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and Franklin Liberty.
Diversification Opportunities for Franklin Liberty and Franklin Liberty
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Federal and Franklin Liberty High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty High 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 Federal are associated (or correlated) with Franklin Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Liberty High has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and Franklin Liberty go up and down completely randomly.
Pair Corralation between Franklin Liberty and Franklin Liberty
Given the investment horizon of 90 days Franklin Liberty Federal is expected to generate 1.69 times more return on investment than Franklin Liberty. However, Franklin Liberty is 1.69 times more volatile than Franklin Liberty High. It trades about 0.15 of its potential returns per unit of risk. Franklin Liberty High is currently generating about 0.17 per unit of risk. If you would invest 2,397 in Franklin Liberty Federal on August 31, 2024 and sell it today you would earn a total of 33.50 from holding Franklin Liberty Federal or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Franklin Liberty Federal vs. Franklin Liberty High
Performance |
| Timeline |
| Franklin Liberty Federal |
| Franklin Liberty High |
Franklin Liberty and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and Franklin Liberty
The main advantage of trading using opposite Franklin Liberty and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, Franklin Liberty 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 Franklin Liberty will offset losses from the drop in Franklin Liberty's long position.| Franklin Liberty vs. VanEck Intermediate Muni | Franklin Liberty vs. VanEck Short Muni | Franklin Liberty vs. Invesco National AMT Free | Franklin Liberty vs. SPDR Nuveen Bloomberg |
| Franklin Liberty vs. iShares Edge High | Franklin Liberty vs. Franklin Liberty Senior | Franklin Liberty vs. Franklin Liberty International | Franklin Liberty vs. PGIM Active High |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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