Correlation Between Direxion Shares and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Direxion Shares 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 Direxion Shares and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Shares ETF and Franklin Liberty Investment, you can compare the effects of market volatilities on Direxion Shares 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 Direxion Shares with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and Franklin Liberty.
Diversification Opportunities for Direxion Shares and Franklin Liberty
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direxion and Franklin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF 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 Direxion Shares 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 Direxion Shares ETF 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 Direxion Shares i.e., Direxion Shares and Franklin Liberty go up and down completely randomly.
Pair Corralation between Direxion Shares and Franklin Liberty
Given the investment horizon of 90 days Direxion Shares ETF is expected to generate 18.54 times more return on investment than Franklin Liberty. However, Direxion Shares is 18.54 times more volatile than Franklin Liberty Investment. It trades about 0.11 of its potential returns per unit of risk. Franklin Liberty Investment is currently generating about 0.05 per unit of risk. If you would invest 2,419 in Direxion Shares ETF on November 3, 2024 and sell it today you would earn a total of 251.00 from holding Direxion Shares ETF or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Direxion Shares ETF vs. Franklin Liberty Investment
Performance |
| Timeline |
| Direxion Shares ETF |
| Franklin Liberty Inv |
Direxion Shares and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and Franklin Liberty
The main advantage of trading using opposite Direxion Shares and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares 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.| Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. AXS TSLA Bear | Direxion Shares vs. Direxion Daily AMZN |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |