Correlation Between Franklin FTSE and Franklin Libertyshares

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

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

Diversification Opportunities for Franklin FTSE and Franklin Libertyshares

-0.22

Correlation Coefficient

Franklin FTSE  Franklin Libertyshares

Very good diversification

The 3 months correlation between Franklin and Franklin is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Brazil and Franklin Libertyshares ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Libertyshares and Franklin FTSE 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 FTSE Brazil are associated (or correlated) with Franklin Libertyshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Libertyshares has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and Franklin Libertyshares go up and down completely randomly.

Pair Corralation between Franklin FTSE and Franklin Libertyshares

Assuming the 90 days trading horizon Franklin FTSE Brazil is expected to under-perform the Franklin Libertyshares. In addition to that, Franklin FTSE is 1.56 times more volatile than Franklin Libertyshares ICAV. It trades about -0.18 of its total potential returns per unit of risk. Franklin Libertyshares ICAV is currently generating about 0.09 per unit of volatility. If you would invest  2,105  in Franklin Libertyshares ICAV on September 4, 2024 and sell it today you would earn a total of  96.00  from holding Franklin Libertyshares ICAV or generate 4.56% return on investment over 90 days.

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

Franklin FTSE Brazil  vs.  Franklin Libertyshares ICAV

Franklin FTSE Brazil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin FTSE Brazil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Franklin Libertyshares

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Libertyshares ICAV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Franklin Libertyshares is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Franklin FTSE and Franklin Libertyshares

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

The idea behind Franklin FTSE Brazil and Franklin Libertyshares ICAV 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.