Correlation Between Franklin FTSE and Franklin LibertyQ
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and Franklin LibertyQ 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 FTSE and Franklin LibertyQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin FTSE Asia and Franklin LibertyQ Equity, you can compare the effects of market volatilities on Franklin FTSE and Franklin LibertyQ 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 FTSE with a short position of Franklin LibertyQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and Franklin LibertyQ.
Diversification Opportunities for Franklin FTSE and Franklin LibertyQ
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Franklin is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Asia and Franklin LibertyQ Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ Equity and Franklin FTSE 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 FTSE Asia are associated (or correlated) with Franklin LibertyQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin LibertyQ Equity has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and Franklin LibertyQ go up and down completely randomly.
Pair Corralation between Franklin FTSE and Franklin LibertyQ
Assuming the 90 days trading horizon Franklin FTSE Asia is expected to under-perform the Franklin LibertyQ. But the etf apears to be less risky and, when comparing its historical volatility, Franklin FTSE Asia is 1.05 times less risky than Franklin LibertyQ. The etf trades about -0.14 of its potential returns per unit of risk. The Franklin LibertyQ Equity is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 4,447 in Franklin LibertyQ Equity on September 3, 2024 and sell it today you would earn a total of 294.00 from holding Franklin LibertyQ Equity or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin FTSE Asia vs. Franklin LibertyQ Equity
Performance |
| Timeline |
| Franklin FTSE Asia |
| Franklin LibertyQ Equity |
Franklin FTSE and Franklin LibertyQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and Franklin LibertyQ
The main advantage of trading using opposite Franklin FTSE and Franklin LibertyQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, Franklin LibertyQ 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 LibertyQ will offset losses from the drop in Franklin LibertyQ's long position.| Franklin FTSE vs. Franklin LibertyQ Global | Franklin FTSE vs. Franklin Libertyshares ICAV | Franklin FTSE vs. Franklin FTSE Brazil | Franklin FTSE vs. Franklin LibertyQ AC |
| Franklin LibertyQ vs. Franklin LibertyQ Global | Franklin LibertyQ vs. Franklin Libertyshares ICAV | Franklin LibertyQ vs. Franklin FTSE Asia | Franklin LibertyQ vs. Franklin FTSE Brazil |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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