Correlation Between Franklin Liberty and SSGA Active
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and SSGA Active 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 SSGA Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Liberty Intermediate and SSGA Active Trust, you can compare the effects of market volatilities on Franklin Liberty and SSGA Active 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 SSGA Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and SSGA Active.
Diversification Opportunities for Franklin Liberty and SSGA Active
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and SSGA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Intermediate and SSGA Active Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSGA Active Trust 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 Intermediate are associated (or correlated) with SSGA Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSGA Active Trust has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and SSGA Active go up and down completely randomly.
Pair Corralation between Franklin Liberty and SSGA Active
Given the investment horizon of 90 days Franklin Liberty Intermediate is expected to generate 1.57 times more return on investment than SSGA Active. However, Franklin Liberty is 1.57 times more volatile than SSGA Active Trust. It trades about 0.08 of its potential returns per unit of risk. SSGA Active Trust is currently generating about 0.07 per unit of risk. If you would invest 2,175 in Franklin Liberty Intermediate on September 24, 2024 and sell it today you would earn a total of 278.00 from holding Franklin Liberty Intermediate or generate 12.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Liberty Intermediate vs. SSGA Active Trust
Performance |
Timeline |
Franklin Liberty Int |
SSGA Active Trust |
Franklin Liberty and SSGA Active Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Liberty and SSGA Active
The main advantage of trading using opposite Franklin Liberty and SSGA Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, SSGA Active 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 SSGA Active will offset losses from the drop in SSGA Active's long position.Franklin Liberty vs. Franklin Liberty Federal | Franklin Liberty vs. Hartford Municipal Opportunities | Franklin Liberty vs. IQ MacKay Municipal | Franklin Liberty vs. First Trust Municipal |
SSGA Active vs. IQ MacKay Municipal | SSGA Active vs. IQ MacKay Municipal | SSGA Active vs. Franklin Liberty Intermediate | SSGA Active vs. American Century Diversified |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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