Correlation Between IShares Core and Franklin LibertyQ

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

By analyzing existing cross correlation between iShares Core SP and Franklin LibertyQ Mid, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of Franklin LibertyQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Franklin LibertyQ.

Diversification Opportunities for IShares Core and Franklin LibertyQ

0.96

Correlation Coefficient

IShares Core  Franklin LibertyQ

Almost no diversification

The 3 months correlation between IShares and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Franklin LibertyQ Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ Mid and IShares Core 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 iShares Core SP 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 Mid has no effect on the direction of IShares Core i.e., IShares Core and Franklin LibertyQ go up and down completely randomly.

Pair Corralation between IShares Core and Franklin LibertyQ

Considering the 90-day investment horizon iShares Core SP is expected to under-perform the Franklin LibertyQ. In addition to that, IShares Core is 1.22 times more volatile than Franklin LibertyQ Mid. It trades about -0.14 of its total potential returns per unit of risk. Franklin LibertyQ Mid is currently generating about -0.11 per unit of volatility. If you would invest  5,818  in Franklin LibertyQ Mid on December 1, 2024 and sell it today you would lose (306.00) from holding Franklin LibertyQ Mid or give up 5.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

iShares Core SP  vs.  Franklin LibertyQ Mid

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's forward-looking indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Franklin LibertyQ Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin LibertyQ Mid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Franklin LibertyQ is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and Franklin LibertyQ

The main advantage of trading using opposite IShares Core and Franklin LibertyQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 iShares Core SP and Franklin LibertyQ Mid 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.