Correlation Between FlexShares Global and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both FlexShares Global 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 FlexShares Global and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares Global Quality and Franklin Liberty High, you can compare the effects of market volatilities on FlexShares Global 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 FlexShares Global with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Global and Franklin Liberty.
Diversification Opportunities for FlexShares Global and Franklin Liberty
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between FlexShares and Franklin is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Global Quality and Franklin Liberty High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty High and FlexShares Global 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 FlexShares Global Quality 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 High has no effect on the direction of FlexShares Global i.e., FlexShares Global and Franklin Liberty go up and down completely randomly.
Pair Corralation between FlexShares Global and Franklin Liberty
Given the investment horizon of 90 days FlexShares Global Quality is expected to generate 4.4 times more return on investment than Franklin Liberty. However, FlexShares Global is 4.4 times more volatile than Franklin Liberty High. It trades about 0.14 of its potential returns per unit of risk. Franklin Liberty High is currently generating about 0.22 per unit of risk. If you would invest 5,670 in FlexShares Global Quality on November 18, 2024 and sell it today you would earn a total of 136.00 from holding FlexShares Global Quality or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares Global Quality vs. Franklin Liberty High
Performance |
| Timeline |
| FlexShares Global Quality |
| Franklin Liberty High |
FlexShares Global and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Global and Franklin Liberty
The main advantage of trading using opposite FlexShares Global and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Global 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.| FlexShares Global vs. FlexShares International Quality | FlexShares Global vs. FlexShares International Quality | FlexShares Global vs. FlexShares Quality Dividend | FlexShares Global vs. First Trust SP |
| Franklin Liberty vs. iShares Edge High | Franklin Liberty vs. Franklin Liberty Senior | Franklin Liberty vs. Franklin Liberty International | Franklin Liberty vs. PGIM Active High |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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