Correlation Between SPDR Nuveen and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both SPDR Nuveen 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 SPDR Nuveen and Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Nuveen Bloomberg and Franklin Liberty Intermediate, you can compare the effects of market volatilities on SPDR Nuveen 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 SPDR Nuveen with a short position of Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Nuveen and Franklin Liberty.
Diversification Opportunities for SPDR Nuveen and Franklin Liberty
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Franklin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Nuveen Bloomberg and Franklin Liberty Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Int and SPDR Nuveen 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 SPDR Nuveen Bloomberg 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 Int has no effect on the direction of SPDR Nuveen i.e., SPDR Nuveen and Franklin Liberty go up and down completely randomly.
Pair Corralation between SPDR Nuveen and Franklin Liberty
Given the investment horizon of 90 days SPDR Nuveen Bloomberg is expected to under-perform the Franklin Liberty. In addition to that, SPDR Nuveen is 1.14 times more volatile than Franklin Liberty Intermediate. It trades about -0.05 of its total potential returns per unit of risk. Franklin Liberty Intermediate is currently generating about -0.02 per unit of volatility. If you would invest 2,464 in Franklin Liberty Intermediate on September 25, 2024 and sell it today you would lose (13.00) from holding Franklin Liberty Intermediate or give up 0.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR Nuveen Bloomberg vs. Franklin Liberty Intermediate
Performance |
Timeline |
SPDR Nuveen Bloomberg |
Franklin Liberty Int |
SPDR Nuveen and Franklin Liberty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR Nuveen and Franklin Liberty
The main advantage of trading using opposite SPDR Nuveen and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Nuveen 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.SPDR Nuveen vs. BlackRock Intermediate Muni | SPDR Nuveen vs. VanEck Short High | SPDR Nuveen vs. iShares iBonds Dec | SPDR Nuveen vs. iShares Short Maturity |
Franklin Liberty vs. BlackRock Intermediate Muni | Franklin Liberty vs. VanEck Short High | Franklin Liberty vs. iShares iBonds Dec | Franklin Liberty vs. SPDR Nuveen Bloomberg |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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