Correlation Between Franklin LibertyQ and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Franklin LibertyQ and SPDR SP 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 LibertyQ and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin LibertyQ Mid and SPDR SP 400, you can compare the effects of market volatilities on Franklin LibertyQ and SPDR SP 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 LibertyQ with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin LibertyQ and SPDR SP.
Diversification Opportunities for Franklin LibertyQ and SPDR SP
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Franklin LibertyQ Mid and SPDR SP 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 400 and Franklin LibertyQ 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 LibertyQ Mid are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 400 has no effect on the direction of Franklin LibertyQ i.e., Franklin LibertyQ and SPDR SP go up and down completely randomly.
Pair Corralation between Franklin LibertyQ and SPDR SP
Given the investment horizon of 90 days Franklin LibertyQ Mid is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, Franklin LibertyQ Mid is 1.23 times less risky than SPDR SP. The etf trades about -0.12 of its potential returns per unit of risk. The SPDR SP 400 is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 9,466 in SPDR SP 400 on October 26, 2024 and sell it today you would lose (287.00) from holding SPDR SP 400 or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin LibertyQ Mid vs. SPDR SP 400
Performance |
| Timeline |
| Franklin LibertyQ Mid |
| SPDR SP 400 |
Franklin LibertyQ and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin LibertyQ and SPDR SP
The main advantage of trading using opposite Franklin LibertyQ and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin LibertyQ position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Franklin LibertyQ vs. Franklin LibertyQ Small | Franklin LibertyQ vs. Franklin LibertyQ Equity | Franklin LibertyQ vs. iShares Currency Hedged | Franklin LibertyQ vs. Franklin Liberty Short |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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