Correlation Between Dimensional ETF and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF 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 Dimensional ETF and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional ETF Trust and Franklin Templeton ETF, you can compare the effects of market volatilities on Dimensional ETF 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 Dimensional ETF with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Franklin Templeton.
Diversification Opportunities for Dimensional ETF and Franklin Templeton
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dimensional and Franklin is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF 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 Dimensional ETF 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 Dimensional ETF 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 Dimensional ETF i.e., Dimensional ETF and Franklin Templeton go up and down completely randomly.
Pair Corralation between Dimensional ETF and Franklin Templeton
Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 1.03 times more return on investment than Franklin Templeton. However, Dimensional ETF is 1.03 times more volatile than Franklin Templeton ETF. It trades about 0.06 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 4,180 in Dimensional ETF Trust on August 29, 2024 and sell it today you would earn a total of 23.00 from holding Dimensional ETF Trust or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional ETF Trust vs. Franklin Templeton ETF
Performance |
| Timeline |
| Dimensional ETF Trust |
| Franklin Templeton ETF |
Dimensional ETF and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and Franklin Templeton
The main advantage of trading using opposite Dimensional ETF and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF 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.| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Core Equity | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Emerging Core |
| Franklin Templeton vs. iShares Agency Bond | Franklin Templeton vs. iShares GNMA Bond | Franklin Templeton vs. iShares JP Morgan | Franklin Templeton vs. iShares Aaa |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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