Correlation Between Franklin FTSE and Franklin LibertyQ

Can any of the company-specific risk be diversified away by investing in both Franklin FTSE 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 FTSE 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 FTSE Brazil and Franklin LibertyQ Global, you can compare the effects of market volatilities on Franklin FTSE 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 FTSE with a short position of Franklin LibertyQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and Franklin LibertyQ.

Diversification Opportunities for Franklin FTSE and Franklin LibertyQ

-0.05

Correlation Coefficient

Franklin FTSE  Franklin LibertyQ

Good diversification

The 3 months correlation between Franklin and Franklin is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Brazil and Franklin LibertyQ Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ Global 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 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 Global has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and Franklin LibertyQ go up and down completely randomly.

Pair Corralation between Franklin FTSE and Franklin LibertyQ

Assuming the 90 days trading horizon Franklin FTSE Brazil is expected to under-perform the Franklin LibertyQ. In addition to that, Franklin FTSE is 2.14 times more volatile than Franklin LibertyQ Global. It trades about -0.09 of its total potential returns per unit of risk. Franklin LibertyQ Global is currently generating about 0.17 per unit of volatility. If you would invest  2,715  in Franklin LibertyQ Global on September 11, 2024 and sell it today you would earn a total of  195.00  from holding Franklin LibertyQ Global or generate 7.18% 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 LibertyQ Global

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 latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Franklin LibertyQ Global

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin LibertyQ Global are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Franklin LibertyQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Franklin FTSE and Franklin LibertyQ

The main advantage of trading using opposite Franklin FTSE and Franklin LibertyQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE 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 FTSE Brazil and Franklin LibertyQ Global 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.