Correlation Between Texas Capital and Franklin Liberty

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

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

Diversification Opportunities for Texas Capital and Franklin Liberty

0.78

Correlation Coefficient

Texas Capital  Franklin Liberty

Poor diversification

The 3 months correlation between Texas and Franklin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Texas Capital Funds 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 Texas Capital 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 Texas Capital Funds 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 Texas Capital i.e., Texas Capital and Franklin Liberty go up and down completely randomly.

Pair Corralation between Texas Capital and Franklin Liberty

Given the investment horizon of 90 days Texas Capital is expected to generate 2.22 times less return on investment than Franklin Liberty. But when comparing it to its historical volatility, Texas Capital Funds is 17.51 times less risky than Franklin Liberty. It trades about 0.78 of its potential returns per unit of risk. Franklin Liberty Treasury is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,996  in Franklin Liberty Treasury on February 3, 2025 and sell it today you would earn a total of  42.00  from holding Franklin Liberty Treasury or generate 2.1% return on investment over 90 days.

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

Texas Capital Funds  vs.  Franklin Liberty Treasury

Texas Capital Funds

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Capital Funds are ranked lower than 61 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Texas Capital is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Franklin Liberty Treasury

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Liberty Treasury are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Franklin Liberty is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Texas Capital and Franklin Liberty

The main advantage of trading using opposite Texas Capital and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Capital 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 Texas Capital Funds 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.