Correlation Between GraniteShares and Franklin LibertyQ

Can any of the company-specific risk be diversified away by investing in both GraniteShares and Franklin LibertyQ 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 GraniteShares and Franklin LibertyQ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 3x Short and Franklin LibertyQ AC, you can compare the effects of market volatilities on GraniteShares and Franklin LibertyQ 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 GraniteShares with a short position of Franklin LibertyQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and Franklin LibertyQ.

Diversification Opportunities for GraniteShares and Franklin LibertyQ

-0.09

Correlation Coefficient

GraniteShares  Franklin LibertyQ

Good diversification

The 3 months correlation between GraniteShares and Franklin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and Franklin LibertyQ AC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ and GraniteShares 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 GraniteShares 3x Short are associated (or correlated) with Franklin LibertyQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin LibertyQ has no effect on the direction of GraniteShares i.e., GraniteShares and Franklin LibertyQ go up and down completely randomly.

Pair Corralation between GraniteShares and Franklin LibertyQ

Assuming the 90 days trading horizon GraniteShares 3x Short is expected to generate 13.65 times more return on investment than Franklin LibertyQ. However, GraniteShares is 13.65 times more volatile than Franklin LibertyQ AC. It trades about 0.06 of its potential returns per unit of risk. Franklin LibertyQ AC is currently generating about -0.13 per unit of risk. If you would invest  57,838  in GraniteShares 3x Short on December 4, 2024 and sell it today you would earn a total of  3,750  from holding GraniteShares 3x Short or generate 6.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GraniteShares 3x Short  vs.  Franklin LibertyQ AC

GraniteShares 3x Short

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 3x Short are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GraniteShares unveiled solid returns over the last few months and may actually be approaching a breakup point.

Franklin LibertyQ

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin LibertyQ AC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with GraniteShares and Franklin LibertyQ

The main advantage of trading using opposite GraniteShares and Franklin LibertyQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, Franklin LibertyQ 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 LibertyQ will offset losses from the drop in Franklin LibertyQ's long position.

The idea behind GraniteShares 3x Short and Franklin LibertyQ AC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.