Correlation Between IShares ESG and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both IShares ESG 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 IShares ESG and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG USD and Franklin Liberty International, you can compare the effects of market volatilities on IShares ESG 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 IShares ESG with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Franklin Liberty.
Diversification Opportunities for IShares ESG and Franklin Liberty
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Franklin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG USD and Franklin Liberty International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Int and IShares ESG 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 iShares ESG USD 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 Int has no effect on the direction of IShares ESG i.e., IShares ESG and Franklin Liberty go up and down completely randomly.
Pair Corralation between IShares ESG and Franklin Liberty
Given the investment horizon of 90 days iShares ESG USD is expected to generate 1.92 times more return on investment than Franklin Liberty. However, IShares ESG is 1.92 times more volatile than Franklin Liberty International. It trades about 0.21 of its potential returns per unit of risk. Franklin Liberty International is currently generating about 0.23 per unit of risk. If you would invest 2,292 in iShares ESG USD on September 2, 2024 and sell it today you would earn a total of 45.00 from holding iShares ESG USD or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG USD vs. Franklin Liberty International
Performance |
| Timeline |
| iShares ESG USD |
| Franklin Liberty Int |
IShares ESG and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Franklin Liberty
The main advantage of trading using opposite IShares ESG and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG 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.| IShares ESG vs. VanEck Vectors Moodys | IShares ESG vs. BondBloxx ETF Trust | IShares ESG vs. Vanguard ESG Corporate | IShares ESG vs. Vanguard Intermediate Term Corporate |
| Franklin Liberty vs. iShares ESG USD | Franklin Liberty vs. iShares ESG 1 5 | Franklin Liberty vs. iShares ESG Aggregate | Franklin Liberty vs. iShares ESG Aware |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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