Correlation Between Thrivent High and Franklin Liberty

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

By analyzing existing cross correlation between Thrivent High Yield and Franklin Liberty Investment, you can compare the effects of market volatilities on Thrivent High and Franklin Liberty 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 Thrivent High with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and Franklin Liberty.

Diversification Opportunities for Thrivent High and Franklin Liberty

0.13

Correlation Coefficient

Thrivent High  Franklin Liberty

Average diversification

The 3 months correlation between Thrivent and Franklin is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Franklin Liberty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Inv and Thrivent High 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 Thrivent High Yield are associated (or correlated) with Franklin Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Liberty Inv has no effect on the direction of Thrivent High i.e., Thrivent High and Franklin Liberty go up and down completely randomly.

Pair Corralation between Thrivent High and Franklin Liberty

Assuming the 90 days horizon Thrivent High is expected to generate 1.25 times less return on investment than Franklin Liberty. But when comparing it to its historical volatility, Thrivent High Yield is 2.61 times less risky than Franklin Liberty. It trades about 0.08 of its potential returns per unit of risk. Franklin Liberty Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,125  in Franklin Liberty Investment on September 16, 2024 and sell it today you would earn a total of  6.00  from holding Franklin Liberty Investment or generate 0.28% return on investment over 90 days.

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

Thrivent High Yield  vs.  Franklin Liberty Investment

Thrivent High Yield

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Thrivent High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Liberty Inv

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Thrivent High and Franklin Liberty

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

The idea behind Thrivent High Yield and Franklin Liberty Investment 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.