Correlation Between Franklin Liberty and Franklin LibertyQ

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

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

Diversification Opportunities for Franklin Liberty and Franklin LibertyQ

0.13

Correlation Coefficient

Franklin Liberty  Franklin LibertyQ

Average diversification

The 3 months correlation between Franklin and Franklin is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Investment and Franklin LibertyQ Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ Equity and Franklin Liberty 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 Franklin Liberty Investment 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 Equity has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and Franklin LibertyQ go up and down completely randomly.

Pair Corralation between Franklin Liberty and Franklin LibertyQ

Given the investment horizon of 90 days Franklin Liberty Investment is expected to under-perform the Franklin LibertyQ. But the etf apears to be less risky and, when comparing its historical volatility, Franklin Liberty Investment is 3.21 times less risky than Franklin LibertyQ. The etf trades about -0.46 of its potential returns per unit of risk. The Franklin LibertyQ Equity is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  6,058  in Franklin LibertyQ Equity on October 10, 2024 and sell it today you would lose (154.00) from holding Franklin LibertyQ Equity or give up 2.54% of portfolio value over 90 days.

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

Franklin Liberty Investment  vs.  Franklin LibertyQ Equity

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.

Franklin LibertyQ Equity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin LibertyQ Equity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Franklin LibertyQ is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Franklin Liberty and Franklin LibertyQ

The main advantage of trading using opposite Franklin Liberty and Franklin LibertyQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty 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 Franklin Liberty Investment and Franklin LibertyQ Equity 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.