Correlation Between Franklin Liberty and US Treasury
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and US 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 US Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Liberty Short and US Treasury 6, you can compare the effects of market volatilities on Franklin Liberty and US 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 US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and US Treasury.
Diversification Opportunities for Franklin Liberty and US Treasury
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and XBIL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Short and US Treasury 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 6 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 Short are associated (or correlated) with US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 6 has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and US Treasury go up and down completely randomly.
Pair Corralation between Franklin Liberty and US Treasury
Given the investment horizon of 90 days Franklin Liberty Short is expected to under-perform the US Treasury. In addition to that, Franklin Liberty is 3.07 times more volatile than US Treasury 6. It trades about -0.02 of its total potential returns per unit of risk. US Treasury 6 is currently generating about 0.64 per unit of volatility. If you would invest 4,981 in US Treasury 6 on August 25, 2024 and sell it today you would earn a total of 31.00 from holding US Treasury 6 or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Liberty Short vs. US Treasury 6
Performance |
| Timeline |
| Franklin Liberty Short |
| US Treasury 6 |
Franklin Liberty and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and US Treasury
The main advantage of trading using opposite Franklin Liberty and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, US 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 US Treasury will offset losses from the drop in US Treasury's long position.| Franklin Liberty vs. SPDR Barclays Short | Franklin Liberty vs. iShares Agency Bond | Franklin Liberty vs. Rbb Fund | Franklin Liberty vs. Bondbloxx ETF Trust |
| US Treasury vs. Rbb Fund | US Treasury vs. US Treasury 12 | US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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