Correlation Between IShares Currency and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both IShares Currency 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 Currency 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 Currency Hedged and Franklin Liberty Low, you can compare the effects of market volatilities on IShares Currency 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 Currency with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Currency and Franklin Liberty.
Diversification Opportunities for IShares Currency and Franklin Liberty
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and Franklin is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding iShares Currency Hedged and Franklin Liberty Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Low and IShares Currency 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 Currency Hedged 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 Low has no effect on the direction of IShares Currency i.e., IShares Currency and Franklin Liberty go up and down completely randomly.
Pair Corralation between IShares Currency and Franklin Liberty
Given the investment horizon of 90 days IShares Currency is expected to generate 1.34 times less return on investment than Franklin Liberty. In addition to that, IShares Currency is 1.23 times more volatile than Franklin Liberty Low. It trades about 0.07 of its total potential returns per unit of risk. Franklin Liberty Low is currently generating about 0.11 per unit of volatility. If you would invest 4,660 in Franklin Liberty Low on August 31, 2024 and sell it today you would earn a total of 931.00 from holding Franklin Liberty Low or generate 19.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.21% |
| Values | Daily Returns |
iShares Currency Hedged vs. Franklin Liberty Low
Performance |
| Timeline |
| iShares Currency Hedged |
| Franklin Liberty Low |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares Currency and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Currency and Franklin Liberty
The main advantage of trading using opposite IShares Currency and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Currency 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 Currency vs. iShares Currency Hedged | IShares Currency vs. iShares MSCI Intl | IShares Currency vs. iShares Currency Hedged |
| Franklin Liberty vs. Franklin Liberty Short | Franklin Liberty vs. Franklin LibertyQ Equity | Franklin Liberty vs. iShares Currency Hedged | Franklin Liberty vs. Franklin LibertyQ Mid |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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