Correlation Between Franklin LibertyQ and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Franklin LibertyQ and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin LibertyQ Global and Dow Jones Industrial, you can compare the effects of market volatilities on Franklin LibertyQ and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin LibertyQ and Dow Jones.
Diversification Opportunities for Franklin LibertyQ and Dow Jones
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Dow is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Franklin LibertyQ Global and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Global are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Franklin LibertyQ i.e., Franklin LibertyQ and Dow Jones go up and down completely randomly.
Pair Corralation between Franklin LibertyQ and Dow Jones
Assuming the 90 days trading horizon Franklin LibertyQ is expected to generate 1.48 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Franklin LibertyQ Global is 1.08 times less risky than Dow Jones. It trades about 0.27 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 321,944 from holding Dow Jones Industrial or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin LibertyQ Global vs. Dow Jones Industrial
Performance |
| Timeline |
Franklin LibertyQ and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Franklin LibertyQ Global
Pair trading matchups for Franklin LibertyQ
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Franklin LibertyQ and Dow Jones
The main advantage of trading using opposite Franklin LibertyQ and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin LibertyQ position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Franklin LibertyQ vs. WisdomTree Natural Gas | Franklin LibertyQ vs. WisdomTree Natural Gas | Franklin LibertyQ vs. Leverage Shares 2x | Franklin LibertyQ vs. WisdomTree Silver 3x |
| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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