Correlation Between Virtus ETF and Franklin Liberty

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

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

Diversification Opportunities for Virtus ETF and Franklin Liberty

0.9

Correlation Coefficient

Virtus ETF  Franklin Liberty

Almost no diversification

The 3 months correlation between Virtus and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Virtus ETF Trust and Franklin Liberty Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Senior and Virtus ETF 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 Virtus ETF Trust 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 Senior has no effect on the direction of Virtus ETF i.e., Virtus ETF and Franklin Liberty go up and down completely randomly.

Pair Corralation between Virtus ETF and Franklin Liberty

Given the investment horizon of 90 days Virtus ETF Trust is expected to generate 0.69 times more return on investment than Franklin Liberty. However, Virtus ETF Trust is 1.45 times less risky than Franklin Liberty. It trades about 0.07 of its potential returns per unit of risk. Franklin Liberty Senior is currently generating about 0.02 per unit of risk. If you would invest  2,353  in Virtus ETF Trust on December 26, 2024 and sell it today you would earn a total of  10.00  from holding Virtus ETF Trust or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Virtus ETF Trust  vs.  Franklin Liberty Senior

Virtus ETF Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Virtus ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Liberty Senior

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Liberty Senior are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Franklin Liberty is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Virtus ETF and Franklin Liberty

The main advantage of trading using opposite Virtus ETF and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus ETF 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 Virtus ETF Trust and Franklin Liberty Senior 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.