Correlation Between Franklin Liberty and Formidable ETF

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

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

Diversification Opportunities for Franklin Liberty and Formidable ETF

0.2

Correlation Coefficient

Franklin Liberty  Formidable ETF

Modest diversification

The 3 months correlation between Franklin and Formidable is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Systematic and Formidable ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formidable ETF and Franklin Liberty 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 Franklin Liberty Systematic are associated (or correlated) with Formidable ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formidable ETF has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and Formidable ETF go up and down completely randomly.

Pair Corralation between Franklin Liberty and Formidable ETF

Given the investment horizon of 90 days Franklin Liberty is expected to generate 1.12 times less return on investment than Formidable ETF. In addition to that, Franklin Liberty is 1.09 times more volatile than Formidable ETF. It trades about 0.08 of its total potential returns per unit of risk. Formidable ETF is currently generating about 0.1 per unit of volatility. If you would invest  2,259  in Formidable ETF on May 20, 2025 and sell it today you would earn a total of  83.00  from holding Formidable ETF or generate 3.67% return on investment over 90 days.

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

Franklin Liberty Systematic  vs.  Formidable ETF

Franklin Liberty Sys

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Liberty Systematic are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Franklin Liberty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Formidable ETF

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Formidable ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Franklin Liberty and Formidable ETF

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

The idea behind Franklin Liberty Systematic and Formidable ETF 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.