Correlation Between VanEck High and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both VanEck High 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 VanEck High and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck High Yield and Franklin Liberty Intermediate, you can compare the effects of market volatilities on VanEck High 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 VanEck High with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck High and Franklin Liberty.
Diversification Opportunities for VanEck High and Franklin Liberty
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and Franklin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding VanEck High Yield and Franklin Liberty Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Int and VanEck High 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 VanEck High Yield 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 Int has no effect on the direction of VanEck High i.e., VanEck High and Franklin Liberty go up and down completely randomly.
Pair Corralation between VanEck High and Franklin Liberty
Considering the 90-day investment horizon VanEck High Yield is expected to generate 0.97 times more return on investment than Franklin Liberty. However, VanEck High Yield is 1.03 times less risky than Franklin Liberty. It trades about 0.18 of its potential returns per unit of risk. Franklin Liberty Intermediate is currently generating about 0.0 per unit of risk. If you would invest 5,126 in VanEck High Yield on October 22, 2024 and sell it today you would earn a total of 43.00 from holding VanEck High Yield or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck High Yield vs. Franklin Liberty Intermediate
Performance |
| Timeline |
| VanEck High Yield |
| Franklin Liberty Int |
VanEck High and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck High and Franklin Liberty
The main advantage of trading using opposite VanEck High and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck High 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.| VanEck High vs. SPDR Nuveen Bloomberg | VanEck High vs. iShares National Muni | VanEck High vs. Invesco National AMT Free | VanEck High vs. VanEck Intermediate Muni |
| Franklin Liberty vs. Franklin Liberty Federal | Franklin Liberty vs. Hartford Municipal Opportunities | Franklin Liberty vs. IQ MacKay Municipal | Franklin Liberty vs. First Trust Municipal |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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