Correlation Between Franklin Liberty and Capital Group
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and Capital Group 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 Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Liberty Intermediate and Capital Group Fixed, you can compare the effects of market volatilities on Franklin Liberty and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and Capital Group.
Diversification Opportunities for Franklin Liberty and Capital Group
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Capital is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Intermediate and Capital Group Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Fixed 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 Intermediate are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Fixed has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and Capital Group go up and down completely randomly.
Pair Corralation between Franklin Liberty and Capital Group
Given the investment horizon of 90 days Franklin Liberty is expected to generate 1.05 times less return on investment than Capital Group. In addition to that, Franklin Liberty is 1.06 times more volatile than Capital Group Fixed. It trades about 0.1 of its total potential returns per unit of risk. Capital Group Fixed is currently generating about 0.11 per unit of volatility. If you would invest 2,548 in Capital Group Fixed on August 29, 2024 and sell it today you would earn a total of 24.00 from holding Capital Group Fixed or generate 0.94% 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 Intermediate vs. Capital Group Fixed
Performance |
| Timeline |
| Franklin Liberty Int |
| Capital Group Fixed |
Franklin Liberty and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and Capital Group
The main advantage of trading using opposite Franklin Liberty and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Franklin Liberty vs. Franklin Liberty Federal | Franklin Liberty vs. Hartford Municipal Opportunities | Franklin Liberty vs. IQ MacKay Municipal | Franklin Liberty vs. First Trust Municipal |
| Capital Group vs. SSGA Active Trust | Capital Group vs. SPDR Nuveen Municipal | Capital Group vs. iShares Short Maturity | Capital Group vs. First Trust Flexible |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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