Correlation Between FlexShares Ready and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both FlexShares Ready 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 FlexShares Ready and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares Ready Access and Franklin Liberty Short, you can compare the effects of market volatilities on FlexShares Ready 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 FlexShares Ready with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Ready and Franklin Liberty.
Diversification Opportunities for FlexShares Ready and Franklin Liberty
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FlexShares and Franklin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Ready Access and Franklin Liberty Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Short and FlexShares Ready 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 FlexShares Ready Access 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 Short has no effect on the direction of FlexShares Ready i.e., FlexShares Ready and Franklin Liberty go up and down completely randomly.
Pair Corralation between FlexShares Ready and Franklin Liberty
Given the investment horizon of 90 days FlexShares Ready is expected to generate 1.01 times less return on investment than Franklin Liberty. But when comparing it to its historical volatility, FlexShares Ready Access is 3.48 times less risky than Franklin Liberty. It trades about 0.85 of its potential returns per unit of risk. Franklin Liberty Short is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 9,024 in Franklin Liberty Short on August 28, 2024 and sell it today you would earn a total of 35.00 from holding Franklin Liberty Short or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares Ready Access vs. Franklin Liberty Short
Performance |
| Timeline |
| FlexShares Ready Access |
| Franklin Liberty Short |
FlexShares Ready and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares Ready and Franklin Liberty
The main advantage of trading using opposite FlexShares Ready and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Ready 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.| FlexShares Ready vs. SPDR SSgA Ultra | FlexShares Ready vs. FlexShares iBoxx 3 Year | FlexShares Ready vs. FlexShares iBoxx 5 Year | FlexShares Ready vs. PIMCO Enhanced Low |
| Franklin Liberty vs. FlexShares Ready Access | Franklin Liberty vs. Franklin Liberty Investment | Franklin Liberty vs. PIMCO Enhanced Low | Franklin Liberty vs. SPDR SSgA Ultra |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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