Correlation Between FlexShares High and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both FlexShares 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 FlexShares 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 FlexShares High Yield and Franklin Liberty High, you can compare the effects of market volatilities on FlexShares 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 FlexShares High with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares High and Franklin Liberty.
Diversification Opportunities for FlexShares High and Franklin Liberty
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FlexShares and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares High Yield 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 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 FlexShares 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 High has no effect on the direction of FlexShares High i.e., FlexShares High and Franklin Liberty go up and down completely randomly.
Pair Corralation between FlexShares High and Franklin Liberty
Given the investment horizon of 90 days FlexShares High Yield is expected to generate 1.05 times more return on investment than Franklin Liberty. However, FlexShares High is 1.05 times more volatile than Franklin Liberty High. It trades about 0.13 of its potential returns per unit of risk. Franklin Liberty High is currently generating about 0.1 per unit of risk. If you would invest 3,990 in FlexShares High Yield on November 2, 2024 and sell it today you would earn a total of 139.00 from holding FlexShares High Yield or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares High Yield vs. Franklin Liberty High
Performance |
| Timeline |
| FlexShares High Yield |
| Franklin Liberty High |
FlexShares High and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares High and Franklin Liberty
The main advantage of trading using opposite FlexShares High and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares 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.| FlexShares High vs. Xtrackers High Beta | FlexShares High vs. iShares Edge High | FlexShares High vs. Xtrackers USD High | FlexShares High vs. iShares Interest Rate |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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