Correlation Between Xtrackers High and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Xtrackers 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 Xtrackers 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 Xtrackers High Beta and Franklin Liberty High, you can compare the effects of market volatilities on Xtrackers 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 Xtrackers High with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers High and Franklin Liberty.
Diversification Opportunities for Xtrackers High and Franklin Liberty
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers High Beta 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 Xtrackers 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 Xtrackers High Beta 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 Xtrackers High i.e., Xtrackers High and Franklin Liberty go up and down completely randomly.
Pair Corralation between Xtrackers High and Franklin Liberty
Given the investment horizon of 90 days Xtrackers High Beta is expected to generate 1.06 times more return on investment than Franklin Liberty. However, Xtrackers High is 1.06 times more volatile than Franklin Liberty High. It trades about 0.2 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 4,034 in Xtrackers High Beta on November 2, 2024 and sell it today you would earn a total of 216.00 from holding Xtrackers High Beta or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers High Beta vs. Franklin Liberty High
Performance |
| Timeline |
| Xtrackers High Beta |
| Franklin Liberty High |
Xtrackers High and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers High and Franklin Liberty
The main advantage of trading using opposite Xtrackers High and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers 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.| Xtrackers High vs. Xtrackers Short Duration | Xtrackers High vs. FlexShares High Yield | Xtrackers High vs. Xtrackers Low Beta | Xtrackers High vs. iShares Edge High |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |