Correlation Between Franklin Templeton and IndexIQ
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and IndexIQ 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 Franklin Templeton and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Templeton Investments and IndexIQ, you can compare the effects of market volatilities on Franklin Templeton and IndexIQ 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 Franklin Templeton with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and IndexIQ.
Diversification Opportunities for Franklin Templeton and IndexIQ
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and IndexIQ is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton Investments and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and Franklin Templeton 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 Franklin Templeton Investments are associated (or correlated) with IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and IndexIQ go up and down completely randomly.
Pair Corralation between Franklin Templeton and IndexIQ
Given the investment horizon of 90 days Franklin Templeton Investments is expected to generate 1.01 times more return on investment than IndexIQ. However, Franklin Templeton is 1.01 times more volatile than IndexIQ. It trades about 0.12 of its potential returns per unit of risk. IndexIQ is currently generating about 0.11 per unit of risk. If you would invest 4,023 in Franklin Templeton Investments on August 31, 2024 and sell it today you would earn a total of 1,317 from holding Franklin Templeton Investments or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 12.4% |
| Values | Daily Returns |
Franklin Templeton Investments vs. IndexIQ
Performance |
| Timeline |
| Franklin Templeton |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Franklin Templeton and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and IndexIQ
The main advantage of trading using opposite Franklin Templeton and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, IndexIQ 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 IndexIQ will offset losses from the drop in IndexIQ's long position.| Franklin Templeton vs. Vanguard Growth Index | Franklin Templeton vs. iShares Russell 1000 | Franklin Templeton vs. iShares SP 500 | Franklin Templeton vs. iShares Core SP |
| IndexIQ vs. VictoryShares Discovery Enhanced | IndexIQ vs. First Trust Mid | IndexIQ vs. First Trust Small |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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