Correlation Between Franklin Liberty and IShares Treasury
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and IShares Treasury 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 IShares Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Liberty Ultra and iShares Treasury Floating, you can compare the effects of market volatilities on Franklin Liberty and IShares Treasury 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 IShares Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and IShares Treasury.
Diversification Opportunities for Franklin Liberty and IShares Treasury
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Ultra and iShares Treasury Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Floating 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 Ultra are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Floating has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and IShares Treasury go up and down completely randomly.
Pair Corralation between Franklin Liberty and IShares Treasury
Given the investment horizon of 90 days Franklin Liberty Ultra is expected to generate 3.89 times more return on investment than IShares Treasury. However, Franklin Liberty is 3.89 times more volatile than iShares Treasury Floating. It trades about 0.25 of its potential returns per unit of risk. iShares Treasury Floating is currently generating about 0.88 per unit of risk. If you would invest 2,225 in Franklin Liberty Ultra on September 14, 2024 and sell it today you would earn a total of 264.00 from holding Franklin Liberty Ultra or generate 11.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Franklin Liberty Ultra vs. iShares Treasury Floating
Performance |
| Timeline |
| Franklin Liberty Ultra |
| iShares Treasury Floating |
Franklin Liberty and IShares Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and IShares Treasury
The main advantage of trading using opposite Franklin Liberty and IShares Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, IShares Treasury 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 IShares Treasury will offset losses from the drop in IShares Treasury's long position.| Franklin Liberty vs. iShares Treasury Floating | Franklin Liberty vs. SPDR Bloomberg Investment | Franklin Liberty vs. SPDR Barclays Short | Franklin Liberty vs. SPDR Bloomberg 1 3 |
| IShares Treasury vs. WisdomTree Floating Rate | IShares Treasury vs. iShares 0 3 Month | IShares Treasury vs. iShares Ultra Short Term | IShares Treasury vs. iShares Floating Rate |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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