Correlation Between WisdomTree and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both WisdomTree and Franklin FTSE 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 WisdomTree and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree SP 500 and Franklin FTSE Brazil, you can compare the effects of market volatilities on WisdomTree and Franklin FTSE 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 WisdomTree with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree and Franklin FTSE.
Diversification Opportunities for WisdomTree and Franklin FTSE
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Franklin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SP 500 and Franklin FTSE Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Brazil and WisdomTree 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 WisdomTree SP 500 are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Brazil has no effect on the direction of WisdomTree i.e., WisdomTree and Franklin FTSE go up and down completely randomly.
Pair Corralation between WisdomTree and Franklin FTSE
Assuming the 90 days trading horizon WisdomTree SP 500 is expected to under-perform the Franklin FTSE. In addition to that, WisdomTree is 1.85 times more volatile than Franklin FTSE Brazil. It trades about -0.12 of its total potential returns per unit of risk. Franklin FTSE Brazil is currently generating about -0.15 per unit of volatility. If you would invest 2,505 in Franklin FTSE Brazil on September 3, 2024 and sell it today you would lose (300.00) from holding Franklin FTSE Brazil or give up 11.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree SP 500 vs. Franklin FTSE Brazil
Performance |
| Timeline |
| WisdomTree SP 500 |
| Franklin FTSE Brazil |
WisdomTree and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree and Franklin FTSE
The main advantage of trading using opposite WisdomTree and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree position performs unexpectedly, Franklin FTSE 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 FTSE will offset losses from the drop in Franklin FTSE's long position.| WisdomTree vs. WisdomTree Zinc | WisdomTree vs. WisdomTree Brent Crude | WisdomTree vs. WisdomTree Aluminium 2x | WisdomTree vs. WisdomTree Enhanced Commodity |
| Franklin FTSE vs. Franklin LibertyQ Global | Franklin FTSE vs. Franklin Libertyshares ICAV | Franklin FTSE vs. Franklin FTSE Asia | Franklin FTSE vs. Franklin LibertyQ AC |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |