Correlation Between DBX ETF and Franklin LibertyQ
Can any of the company-specific risk be diversified away by investing in both DBX ETF and Franklin LibertyQ 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 DBX ETF and Franklin LibertyQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBX ETF Trust and Franklin LibertyQ Mid, you can compare the effects of market volatilities on DBX ETF and Franklin LibertyQ 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 DBX ETF with a short position of Franklin LibertyQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBX ETF and Franklin LibertyQ.
Diversification Opportunities for DBX ETF and Franklin LibertyQ
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DBX and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding DBX ETF Trust and Franklin LibertyQ Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ Mid and DBX ETF 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 DBX ETF Trust are associated (or correlated) with Franklin LibertyQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin LibertyQ Mid has no effect on the direction of DBX ETF i.e., DBX ETF and Franklin LibertyQ go up and down completely randomly.
Pair Corralation between DBX ETF and Franklin LibertyQ
Given the investment horizon of 90 days DBX ETF is expected to generate 1.15 times less return on investment than Franklin LibertyQ. In addition to that, DBX ETF is 1.25 times more volatile than Franklin LibertyQ Mid. It trades about 0.05 of its total potential returns per unit of risk. Franklin LibertyQ Mid is currently generating about 0.07 per unit of volatility. If you would invest 4,279 in Franklin LibertyQ Mid on August 23, 2024 and sell it today you would earn a total of 1,381 from holding Franklin LibertyQ Mid or generate 32.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DBX ETF Trust vs. Franklin LibertyQ Mid
Performance |
| Timeline |
| DBX ETF Trust |
| Franklin LibertyQ Mid |
DBX ETF and Franklin LibertyQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBX ETF and Franklin LibertyQ
The main advantage of trading using opposite DBX ETF and Franklin LibertyQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBX ETF position performs unexpectedly, Franklin LibertyQ 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 LibertyQ will offset losses from the drop in Franklin LibertyQ's long position.The idea behind DBX ETF Trust and Franklin LibertyQ Mid pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Franklin LibertyQ vs. Vanguard Mid Cap Index | Franklin LibertyQ vs. Vanguard Extended Market | Franklin LibertyQ vs. iShares Core SP | Franklin LibertyQ vs. iShares Russell Mid Cap |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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