Correlation Between Franklin Liberty and Tidal Trust

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

By analyzing existing cross correlation between Franklin Liberty Treasury and Tidal Trust II, you can compare the effects of market volatilities on Franklin Liberty and Tidal Trust 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 Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and Tidal Trust.

Diversification Opportunities for Franklin Liberty and Tidal Trust

-0.37

Correlation Coefficient

Franklin Liberty  Tidal Trust

Very good diversification

The 3 months correlation between Franklin and Tidal is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Treasury and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Treasury are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and Tidal Trust go up and down completely randomly.

Pair Corralation between Franklin Liberty and Tidal Trust

Given the investment horizon of 90 days Franklin Liberty Treasury is expected to generate 0.82 times more return on investment than Tidal Trust. However, Franklin Liberty Treasury is 1.22 times less risky than Tidal Trust. It trades about 0.15 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.03 per unit of risk. If you would invest  1,999  in Franklin Liberty Treasury on December 29, 2024 and sell it today you would earn a total of  52.00  from holding Franklin Liberty Treasury or generate 2.6% return on investment over 90 days.

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

Franklin Liberty Treasury  vs.  Tidal Trust II

Franklin Liberty Treasury

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Liberty Treasury are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Franklin Liberty is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tidal Trust II

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Tidal Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Liberty and Tidal Trust

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

The idea behind Franklin Liberty Treasury and Tidal Trust II 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.