Correlation Between Bondbloxx ETF and Franklin Liberty

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

Diversification Opportunities for Bondbloxx ETF and Franklin Liberty

1.0

Correlation Coefficient

Bondbloxx ETF  Franklin Liberty

No risk reduction

The 3 months correlation between Bondbloxx and Franklin is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and Franklin Liberty Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Treasury and Bondbloxx 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 Bondbloxx 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 Treasury has no effect on the direction of Bondbloxx ETF i.e., Bondbloxx ETF and Franklin Liberty go up and down completely randomly.

Pair Corralation between Bondbloxx ETF and Franklin Liberty

Given the investment horizon of 90 days Bondbloxx ETF Trust is expected to under-perform the Franklin Liberty. But the etf apears to be less risky and, when comparing its historical volatility, Bondbloxx ETF Trust is 1.12 times less risky than Franklin Liberty. The etf trades about -0.06 of its potential returns per unit of risk. The Franklin Liberty Treasury is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,068  in Franklin Liberty Treasury on August 30, 2024 and sell it today you would lose (18.00) from holding Franklin Liberty Treasury or give up 0.87% of portfolio value over 90 days.

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

Bondbloxx ETF Trust  vs.  Franklin Liberty Treasury

Bondbloxx ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bondbloxx ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Bondbloxx ETF is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Franklin Liberty Treasury

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Liberty Treasury has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Franklin Liberty is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bondbloxx ETF and Franklin Liberty

The main advantage of trading using opposite Bondbloxx ETF and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bondbloxx 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 Bondbloxx ETF Trust and Franklin Liberty Treasury 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.