Correlation Between DBX ETF and Franklin LibertyQ

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

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

Diversification Opportunities for DBX ETF and Franklin LibertyQ

0.99

Correlation Coefficient

DBX ETF  Franklin LibertyQ

No risk reduction

The 3 months correlation between DBX and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding DBX ETF Trust and Franklin LibertyQ Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ Mid and DBX 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 DBX ETF Trust are associated (or correlated) with Franklin LibertyQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin LibertyQ Mid has no effect on the direction of DBX ETF i.e., DBX ETF and Franklin LibertyQ go up and down completely randomly.

Pair Corralation between DBX ETF and Franklin LibertyQ

Given the investment horizon of 90 days DBX ETF Trust is expected to generate 1.33 times more return on investment than Franklin LibertyQ. However, DBX ETF is 1.33 times more volatile than Franklin LibertyQ Mid. It trades about 0.14 of its potential returns per unit of risk. Franklin LibertyQ Mid is currently generating about 0.14 per unit of risk. If you would invest  3,044  in DBX ETF Trust on August 30, 2024 and sell it today you would earn a total of  271.00  from holding DBX ETF Trust or generate 8.9% return on investment over 90 days.

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

DBX ETF Trust  vs.  Franklin LibertyQ Mid

DBX ETF Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DBX ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, DBX ETF may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Franklin LibertyQ Mid

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin LibertyQ Mid are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Franklin LibertyQ may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with DBX ETF and Franklin LibertyQ

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

The idea behind DBX ETF Trust and Franklin LibertyQ Mid 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..