Correlation Between IShares Treasury and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both IShares Treasury and Franklin Liberty 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 IShares Treasury and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Treasury Bond and Franklin Liberty Treasury, you can compare the effects of market volatilities on IShares Treasury and Franklin Liberty 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 IShares Treasury with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and Franklin Liberty.
Diversification Opportunities for IShares Treasury and Franklin Liberty
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Franklin is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Bond and Franklin Liberty Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Treasury and IShares Treasury 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 iShares Treasury Bond are associated (or correlated) with Franklin Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Liberty Treasury has no effect on the direction of IShares Treasury i.e., IShares Treasury and Franklin Liberty go up and down completely randomly.
Pair Corralation between IShares Treasury and Franklin Liberty
Given the investment horizon of 90 days iShares Treasury Bond is expected to under-perform the Franklin Liberty. In addition to that, IShares Treasury is 1.01 times more volatile than Franklin Liberty Treasury. It trades about -0.11 of its total potential returns per unit of risk. Franklin Liberty Treasury is currently generating about -0.11 per unit of volatility. If you would invest 2,044 in Franklin Liberty Treasury on August 24, 2024 and sell it today you would lose (15.00) from holding Franklin Liberty Treasury or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Treasury Bond vs. Franklin Liberty Treasury
Performance |
| Timeline |
| iShares Treasury Bond |
| Franklin Liberty Treasury |
IShares Treasury and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Treasury and Franklin Liberty
The main advantage of trading using opposite IShares Treasury and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury position performs unexpectedly, Franklin Liberty 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 Liberty will offset losses from the drop in Franklin Liberty's long position.| IShares Treasury vs. iShares MBS ETF | IShares Treasury vs. iShares Core Total | IShares Treasury vs. iShares 3 7 Year | IShares Treasury vs. iShares 10 20 Year |
| Franklin Liberty vs. Franklin Templeton ETF | Franklin Liberty vs. Franklin Liberty Investment | Franklin Liberty vs. Franklin Liberty International | Franklin Liberty vs. Franklin Liberty Intermediate |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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