Correlation Between IQ MacKay and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both IQ MacKay 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 IQ MacKay and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IQ MacKay Municipal and Franklin Liberty Intermediate, you can compare the effects of market volatilities on IQ MacKay 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 IQ MacKay with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ MacKay and Franklin Liberty.
Diversification Opportunities for IQ MacKay and Franklin Liberty
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MMIN and Franklin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding IQ MacKay Municipal 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 IQ MacKay 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 IQ MacKay Municipal 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 IQ MacKay i.e., IQ MacKay and Franklin Liberty go up and down completely randomly.
Pair Corralation between IQ MacKay and Franklin Liberty
Given the investment horizon of 90 days IQ MacKay Municipal is expected to generate 1.08 times more return on investment than Franklin Liberty. However, IQ MacKay is 1.08 times more volatile than Franklin Liberty Intermediate. It trades about 0.17 of its potential returns per unit of risk. Franklin Liberty Intermediate is currently generating about 0.1 per unit of risk. If you would invest 2,403 in IQ MacKay Municipal on August 29, 2024 and sell it today you would earn a total of 38.00 from holding IQ MacKay Municipal or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IQ MacKay Municipal vs. Franklin Liberty Intermediate
Performance |
| Timeline |
| IQ MacKay Municipal |
| Franklin Liberty Int |
IQ MacKay and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ MacKay and Franklin Liberty
The main advantage of trading using opposite IQ MacKay and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ MacKay 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.| IQ MacKay vs. IQ MacKay Municipal | IQ MacKay vs. Franklin Liberty Federal | IQ MacKay vs. Columbia Multi Sector Municipal | IQ MacKay vs. Hartford Municipal Opportunities |
| 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 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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