Correlation Between Volatility Shares and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Volatility Shares and Franklin Templeton 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 Volatility Shares and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volatility Shares Trust and Franklin Templeton ETF, you can compare the effects of market volatilities on Volatility Shares and Franklin Templeton 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 Volatility Shares with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and Franklin Templeton.
Diversification Opportunities for Volatility Shares and Franklin Templeton
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Volatility and Franklin is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton ETF has no effect on the direction of Volatility Shares i.e., Volatility Shares and Franklin Templeton go up and down completely randomly.
Pair Corralation between Volatility Shares and Franklin Templeton
Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 19.92 times more return on investment than Franklin Templeton. However, Volatility Shares is 19.92 times more volatile than Franklin Templeton ETF. It trades about 0.24 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about 0.05 per unit of risk. If you would invest 5,388 in Volatility Shares Trust on September 18, 2024 and sell it today you would earn a total of 1,667 from holding Volatility Shares Trust or generate 30.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volatility Shares Trust vs. Franklin Templeton ETF
Performance |
| Timeline |
| Volatility Shares Trust |
| Franklin Templeton ETF |
Volatility Shares and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volatility Shares and Franklin Templeton
The main advantage of trading using opposite Volatility Shares and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.| Volatility Shares vs. Bitwise Crypto Industry | Volatility Shares vs. Grayscale Bitcoin Mini | Volatility Shares vs. First Trust SkyBridge |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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