Correlation Between Franklin Liberty and IQ MacKay
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and IQ MacKay 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 IQ MacKay 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 IQ MacKay Municipal, you can compare the effects of market volatilities on Franklin Liberty and IQ MacKay 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 IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and IQ MacKay.
Diversification Opportunities for Franklin Liberty and IQ MacKay
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and MMIN is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Federal and IQ MacKay Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ MacKay Municipal 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 IQ MacKay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ MacKay Municipal has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and IQ MacKay go up and down completely randomly.
Pair Corralation between Franklin Liberty and IQ MacKay
Given the investment horizon of 90 days Franklin Liberty is expected to generate 1.12 times less return on investment than IQ MacKay. In addition to that, Franklin Liberty is 1.47 times more volatile than IQ MacKay Municipal. It trades about 0.06 of its total potential returns per unit of risk. IQ MacKay Municipal is currently generating about 0.1 per unit of volatility. If you would invest 2,376 in IQ MacKay Municipal on November 18, 2024 and sell it today you would earn a total of 15.00 from holding IQ MacKay Municipal or generate 0.63% 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 Federal vs. IQ MacKay Municipal
Performance |
| Timeline |
| Franklin Liberty Federal |
| IQ MacKay Municipal |
Franklin Liberty and IQ MacKay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and IQ MacKay
The main advantage of trading using opposite Franklin Liberty and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, IQ MacKay 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 IQ MacKay will offset losses from the drop in IQ MacKay's long position.| Franklin Liberty vs. Franklin Liberty Intermediate | Franklin Liberty vs. IQ MacKay Municipal | Franklin Liberty vs. Xtrackers Municipal Infrastructure | Franklin Liberty vs. Hartford Municipal Opportunities |
| IQ MacKay vs. IQ MacKay Municipal | IQ MacKay vs. Franklin Liberty Federal | IQ MacKay vs. Columbia Multi Sector Municipal | IQ MacKay vs. Hartford Municipal Opportunities |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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