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 Intermediate 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
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and MMIT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Intermediate 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 Intermediate 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 Intermediate is expected to generate 1.32 times more return on investment than IQ MacKay. However, Franklin Liberty is 1.32 times more volatile than IQ MacKay Municipal. It trades about 0.07 of its potential returns per unit of risk. IQ MacKay Municipal is currently generating about 0.05 per unit of risk. If you would invest 2,226 in Franklin Liberty Intermediate on November 2, 2024 and sell it today you would earn a total of 230.00 from holding Franklin Liberty Intermediate or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Franklin Liberty Intermediate vs. IQ MacKay Municipal
Performance |
| Timeline |
| Franklin Liberty Int |
| 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 Federal | Franklin Liberty vs. Hartford Municipal Opportunities | Franklin Liberty vs. IQ MacKay Municipal | Franklin Liberty vs. First Trust Municipal |
| IQ MacKay vs. IQ MacKay Municipal | IQ MacKay vs. Hartford Municipal Opportunities | IQ MacKay vs. Columbia Multi Sector Municipal | IQ MacKay vs. American Century Diversified |
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.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |