Correlation Between Franklin LibertyQ and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both Franklin LibertyQ and Franklin FTSE 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 Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin LibertyQ AC and Franklin FTSE Asia, you can compare the effects of market volatilities on Franklin LibertyQ and Franklin FTSE 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 Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin LibertyQ and Franklin FTSE.
Diversification Opportunities for Franklin LibertyQ and Franklin FTSE
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Franklin LibertyQ AC and Franklin FTSE Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Asia 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 AC are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Asia has no effect on the direction of Franklin LibertyQ i.e., Franklin LibertyQ and Franklin FTSE go up and down completely randomly.
Pair Corralation between Franklin LibertyQ and Franklin FTSE
Assuming the 90 days trading horizon Franklin LibertyQ AC is expected to generate 0.77 times more return on investment than Franklin FTSE. However, Franklin LibertyQ AC is 1.31 times less risky than Franklin FTSE. It trades about -0.01 of its potential returns per unit of risk. Franklin FTSE Asia is currently generating about -0.08 per unit of risk. If you would invest 1,940 in Franklin LibertyQ AC on September 1, 2024 and sell it today you would lose (4.00) from holding Franklin LibertyQ AC or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin LibertyQ AC vs. Franklin FTSE Asia
Performance |
| Timeline |
| Franklin LibertyQ |
| Franklin FTSE Asia |
Franklin LibertyQ and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin LibertyQ and Franklin FTSE
The main advantage of trading using opposite Franklin LibertyQ and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin LibertyQ position performs unexpectedly, Franklin FTSE 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 FTSE will offset losses from the drop in Franklin FTSE's long position.| Franklin LibertyQ vs. Leverage Shares 3x | Franklin LibertyQ vs. WisdomTree Natural Gas | Franklin LibertyQ vs. GraniteShares 3x Short | Franklin LibertyQ vs. Leverage Shares 3x |
| Franklin FTSE vs. Franklin LibertyQ Global | Franklin FTSE vs. Franklin Libertyshares ICAV | Franklin FTSE vs. Franklin FTSE Brazil | Franklin FTSE vs. Franklin LibertyQ AC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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