Correlation Between Invesco Emerging and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Invesco Emerging 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 Invesco Emerging and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Emerging Markets and Franklin Liberty Senior, you can compare the effects of market volatilities on Invesco Emerging 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 Invesco Emerging with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Emerging and Franklin Liberty.
Diversification Opportunities for Invesco Emerging and Franklin Liberty
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and Franklin is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Emerging Markets and Franklin Liberty Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Senior and Invesco Emerging 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 Invesco Emerging Markets 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 Senior has no effect on the direction of Invesco Emerging i.e., Invesco Emerging and Franklin Liberty go up and down completely randomly.
Pair Corralation between Invesco Emerging and Franklin Liberty
Considering the 90-day investment horizon Invesco Emerging is expected to generate 2.01 times less return on investment than Franklin Liberty. In addition to that, Invesco Emerging is 9.98 times more volatile than Franklin Liberty Senior. It trades about 0.03 of its total potential returns per unit of risk. Franklin Liberty Senior is currently generating about 0.6 per unit of volatility. If you would invest 2,421 in Franklin Liberty Senior on October 20, 2024 and sell it today you would earn a total of 17.00 from holding Franklin Liberty Senior or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Invesco Emerging Markets vs. Franklin Liberty Senior
Performance |
| Timeline |
| Invesco Emerging Markets |
| Franklin Liberty Senior |
Invesco Emerging and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Emerging and Franklin Liberty
The main advantage of trading using opposite Invesco Emerging and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Emerging 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.| Invesco Emerging vs. iShares JP Morgan | Invesco Emerging vs. SPDR Bloomberg International | Invesco Emerging vs. VanEck JP Morgan | Invesco Emerging vs. Invesco Fundamental High |
| Franklin Liberty vs. Franklin Liberty High | Franklin Liberty vs. Pacer Pacific Asset | Franklin Liberty vs. First Trust Senior | Franklin Liberty vs. Franklin Liberty International |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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