Correlation Between Franklin Liberty and Invesco

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

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

Diversification Opportunities for Franklin Liberty and Invesco

0.88

Correlation Coefficient

Franklin Liberty  Invesco

Very poor diversification

The 3 months correlation between Franklin and Invesco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Short and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco 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 Short are associated (or correlated) with Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and Invesco go up and down completely randomly.

Pair Corralation between Franklin Liberty and Invesco

If you would invest  8,961  in Franklin Liberty Short on October 25, 2024 and sell it today you would earn a total of  91.00  from holding Franklin Liberty Short or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.67%
Values	Daily Returns

Franklin Liberty Short  vs.  Invesco

Franklin Liberty Short

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Liberty Short are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Franklin Liberty is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Franklin Liberty and Invesco

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

The idea behind Franklin Liberty Short and Invesco 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.