Correlation Between ETC On and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both ETC On 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 ETC On and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETC on CMCI and Franklin FTSE Brazil, you can compare the effects of market volatilities on ETC On 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 ETC On with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC On and Franklin FTSE.
Diversification Opportunities for ETC On and Franklin FTSE
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ETC and Franklin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding ETC on CMCI 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 ETC On 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 ETC on CMCI 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 ETC On i.e., ETC On and Franklin FTSE go up and down completely randomly.
Pair Corralation between ETC On and Franklin FTSE
Assuming the 90 days trading horizon ETC On is expected to generate 1.63 times less return on investment than Franklin FTSE. But when comparing it to its historical volatility, ETC on CMCI is 1.8 times less risky than Franklin FTSE. It trades about 0.01 of its potential returns per unit of risk. Franklin FTSE Brazil is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,663 in Franklin FTSE Brazil on September 3, 2024 and sell it today you would earn a total of 72.00 from holding Franklin FTSE Brazil or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ETC on CMCI vs. Franklin FTSE Brazil
Performance |
| Timeline |
| ETC on CMCI |
| Franklin FTSE Brazil |
ETC On and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETC On and Franklin FTSE
The main advantage of trading using opposite ETC On and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETC On 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.| ETC On vs. Scottish Mortgage Investment | ETC On vs. VinaCapital Vietnam Opportunity | ETC On vs. Edinburgh Worldwide Investment | ETC On vs. Baillie Gifford Growth |
| Franklin FTSE vs. Franklin LibertyQ Global | Franklin FTSE vs. Franklin Libertyshares ICAV | Franklin FTSE vs. Franklin FTSE Asia | Franklin FTSE vs. Franklin FTSE Brazil |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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