Correlation Between IShares IBoxx and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx 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 IShares IBoxx and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares iBoxx Investment and Franklin Liberty Investment, you can compare the effects of market volatilities on IShares IBoxx 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 IShares IBoxx with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Franklin Liberty.
Diversification Opportunities for IShares IBoxx and Franklin Liberty
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx Investment 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 IShares IBoxx 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 iBoxx Investment 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 IShares IBoxx i.e., IShares IBoxx and Franklin Liberty go up and down completely randomly.
Pair Corralation between IShares IBoxx and Franklin Liberty
Considering the 90-day investment horizon iShares iBoxx Investment is expected to under-perform the Franklin Liberty. In addition to that, IShares IBoxx is 1.23 times more volatile than Franklin Liberty Investment. It trades about 0.0 of its total potential returns per unit of risk. Franklin Liberty Investment is currently generating about 0.01 per unit of volatility. If you would invest 2,064 in Franklin Liberty Investment on January 20, 2024 and sell it today you would earn a total of 7.00 from holding Franklin Liberty Investment or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
iShares iBoxx Investment vs. Franklin Liberty Investment
Performance |
| Timeline |
| iShares iBoxx Investment |
| Franklin Liberty Inv |
IShares IBoxx and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Franklin Liberty
The main advantage of trading using opposite IShares IBoxx and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx 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.| IShares IBoxx vs. PrimeEnergy | IShares IBoxx vs. Israel Acquisitions Corp | IShares IBoxx vs. CKX Lands | IShares IBoxx vs. HUMANA INC |
| Franklin Liberty vs. PrimeEnergy | Franklin Liberty vs. Israel Acquisitions Corp | Franklin Liberty vs. CKX Lands | Franklin Liberty vs. HUMANA INC |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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