Correlation Between FlexShares Core and Franklin Liberty

Can any of the company-specific risk be diversified away by investing in both FlexShares Core 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 Core 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 Core Select and Franklin Liberty Investment, you can compare the effects of market volatilities on FlexShares Core 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 Core with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Core and Franklin Liberty.

Diversification Opportunities for FlexShares Core and Franklin Liberty

0.98

Correlation Coefficient

FlexShares Core  Franklin Liberty

Almost no diversification

The 3 months correlation between FlexShares and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Core Select 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 FlexShares Core 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 Core Select 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 FlexShares Core i.e., FlexShares Core and Franklin Liberty go up and down completely randomly.

Pair Corralation between FlexShares Core and Franklin Liberty

Given the investment horizon of 90 days FlexShares Core Select is expected to under-perform the Franklin Liberty. But the etf apears to be less risky and, when comparing its historical volatility, FlexShares Core Select is 1.14 times less risky than Franklin Liberty. The etf trades about -0.05 of its potential returns per unit of risk. The Franklin Liberty Investment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,125  in Franklin Liberty Investment on October 23, 2024 and sell it today you would lose (18.00) from holding Franklin Liberty Investment or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

FlexShares Core Select  vs.  Franklin Liberty Investment

FlexShares Core Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares Core Select has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, FlexShares Core is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Franklin Liberty Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Liberty Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Franklin Liberty is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FlexShares Core and Franklin Liberty

The main advantage of trading using opposite FlexShares Core and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Core 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.

The idea behind FlexShares Core Select and Franklin Liberty Investment 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.