Correlation Between SPDR MSCI and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both SPDR MSCI 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 SPDR MSCI and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR MSCI USA and Franklin Liberty Investment, you can compare the effects of market volatilities on SPDR MSCI 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 SPDR MSCI with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MSCI and Franklin Liberty.
Diversification Opportunities for SPDR MSCI and Franklin Liberty
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and Franklin is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI USA and Franklin Liberty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Inv and SPDR MSCI 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 SPDR MSCI USA 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 Inv has no effect on the direction of SPDR MSCI i.e., SPDR MSCI and Franklin Liberty go up and down completely randomly.
Pair Corralation between SPDR MSCI and Franklin Liberty
Considering the 90-day investment horizon SPDR MSCI USA is expected to generate 1.5 times more return on investment than Franklin Liberty. However, SPDR MSCI is 1.5 times more volatile than Franklin Liberty Investment. It trades about 0.14 of its potential returns per unit of risk. Franklin Liberty Investment is currently generating about 0.06 per unit of risk. If you would invest 11,730 in SPDR MSCI USA on August 31, 2024 and sell it today you would earn a total of 4,649 from holding SPDR MSCI USA or generate 39.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR MSCI USA vs. Franklin Liberty Investment
Performance |
| Timeline |
| SPDR MSCI USA |
| Franklin Liberty Inv |
SPDR MSCI and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR MSCI and Franklin Liberty
The main advantage of trading using opposite SPDR MSCI and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MSCI 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.| SPDR MSCI vs. SPDR SSGA Large | SPDR MSCI vs. SPDR MSCI EAFE | SPDR MSCI vs. SPDR MSCI Emerging | SPDR MSCI vs. SPDR Russell 1000 |
| Franklin Liberty vs. Franklin Liberty Short | Franklin Liberty vs. Goldman Sachs Access | Franklin Liberty vs. Franklin Templeton ETF | Franklin Liberty vs. Franklin Liberty Federal |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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