Correlation Between Vanguard Total and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Vanguard Total and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and Franklin FTSE United, you can compare the effects of market volatilities on Vanguard Total 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 Vanguard Total with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Franklin FTSE.
Diversification Opportunities for Vanguard Total and Franklin FTSE
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Franklin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Franklin FTSE United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE United and Vanguard Total 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 Vanguard Total Bond 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 United has no effect on the direction of Vanguard Total i.e., Vanguard Total and Franklin FTSE go up and down completely randomly.
Pair Corralation between Vanguard Total and Franklin FTSE
Considering the 90-day investment horizon Vanguard Total is expected to generate 3.63 times less return on investment than Franklin FTSE. But when comparing it to its historical volatility, Vanguard Total Bond is 2.02 times less risky than Franklin FTSE. It trades about 0.03 of its potential returns per unit of risk. Franklin FTSE United is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,202 in Franklin FTSE United on September 3, 2024 and sell it today you would earn a total of 563.00 from holding Franklin FTSE United or generate 25.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Bond vs. Franklin FTSE United
Performance |
| Timeline |
| Vanguard Total Bond |
| Franklin FTSE United |
Vanguard Total and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Franklin FTSE
The main advantage of trading using opposite Vanguard Total and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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