Correlation Between Franklin Libertyshares and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Franklin Libertyshares and Auto Trader 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 Franklin Libertyshares and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Libertyshares ICAV and Auto Trader Group, you can compare the effects of market volatilities on Franklin Libertyshares and Auto Trader 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 Franklin Libertyshares with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Libertyshares and Auto Trader.
Diversification Opportunities for Franklin Libertyshares and Auto Trader
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Auto is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Libertyshares ICAV and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group and Franklin Libertyshares 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 Franklin Libertyshares ICAV are associated (or correlated) with Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Franklin Libertyshares i.e., Franklin Libertyshares and Auto Trader go up and down completely randomly.
Pair Corralation between Franklin Libertyshares and Auto Trader
Assuming the 90 days trading horizon Franklin Libertyshares ICAV is expected to generate 0.8 times more return on investment than Auto Trader. However, Franklin Libertyshares ICAV is 1.25 times less risky than Auto Trader. It trades about 0.06 of its potential returns per unit of risk. Auto Trader Group is currently generating about 0.02 per unit of risk. If you would invest 2,628 in Franklin Libertyshares ICAV on November 4, 2024 and sell it today you would earn a total of 191.00 from holding Franklin Libertyshares ICAV or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Libertyshares ICAV vs. Auto Trader Group
Performance |
| Timeline |
| Franklin Libertyshares |
| Auto Trader Group |
Franklin Libertyshares and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Libertyshares and Auto Trader
The main advantage of trading using opposite Franklin Libertyshares and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Libertyshares position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| Franklin Libertyshares vs. Franklin LibertyQ Global | Franklin Libertyshares vs. Franklin Libertyshares ICAV | Franklin Libertyshares vs. Franklin FTSE Asia | Franklin Libertyshares vs. Franklin FTSE Brazil |
| Auto Trader vs. Cairo Communication SpA | Auto Trader vs. Spirent Communications plc | Auto Trader vs. Melia Hotels | Auto Trader vs. Mobile Tornado Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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