Correlation Between Franklin Templeton and First Trust
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and First Trust 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 First Trust 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 First Trust Dorsey, you can compare the effects of market volatilities on Franklin Templeton and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and First Trust.
Diversification Opportunities for Franklin Templeton and First Trust
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and First is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton Investments and First Trust Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dorsey 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Dorsey has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and First Trust go up and down completely randomly.
Pair Corralation between Franklin Templeton and First Trust
Given the investment horizon of 90 days Franklin Templeton Investments is expected to generate 0.85 times more return on investment than First Trust. However, Franklin Templeton Investments is 1.17 times less risky than First Trust. It trades about 0.12 of its potential returns per unit of risk. First Trust Dorsey is currently generating about 0.02 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 | Insignificant |
| Accuracy | 69.17% |
| Values | Daily Returns |
Franklin Templeton Investments vs. First Trust Dorsey
Performance |
| Timeline |
| Franklin Templeton |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Dorsey |
Franklin Templeton and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and First Trust
The main advantage of trading using opposite Franklin Templeton and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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