Correlation Between SPDR Portfolio and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio 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 Portfolio 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 Portfolio Intermediate and Franklin Liberty Short, you can compare the effects of market volatilities on SPDR Portfolio 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 Portfolio with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Franklin Liberty.
Diversification Opportunities for SPDR Portfolio and Franklin Liberty
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between SPDR and Franklin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Intermediate 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 SPDR Portfolio 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 Portfolio Intermediate 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 SPDR Portfolio i.e., SPDR Portfolio and Franklin Liberty go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Franklin Liberty
Given the investment horizon of 90 days SPDR Portfolio Intermediate is expected to generate 3.91 times more return on investment than Franklin Liberty. However, SPDR Portfolio is 3.91 times more volatile than Franklin Liberty Short. It trades about 0.17 of its potential returns per unit of risk. Franklin Liberty Short is currently generating about 0.31 per unit of risk. If you would invest 2,809 in SPDR Portfolio Intermediate on September 2, 2024 and sell it today you would earn a total of 31.00 from holding SPDR Portfolio Intermediate or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio Intermediate vs. Franklin Liberty Short
Performance |
| Timeline |
| SPDR Portfolio Inter |
| Franklin Liberty Short |
SPDR Portfolio and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Franklin Liberty
The main advantage of trading using opposite SPDR Portfolio and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio 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 Portfolio vs. SPDR Barclays Short | SPDR Portfolio vs. SPDR Barclays Long | SPDR Portfolio vs. SPDR Portfolio Mortgage | SPDR Portfolio vs. SPDR Barclays Intermediate |
| Franklin Liberty vs. SPDR Barclays Long | Franklin Liberty vs. SPDR Portfolio Intermediate | Franklin Liberty vs. SPDR Barclays Short | Franklin Liberty vs. SPDR Barclays Intermediate |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |