Correlation Between Franklin Templeton and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and Direxion Shares 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 Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Templeton ETF and Direxion Shares ETF, you can compare the effects of market volatilities on Franklin Templeton and Direxion Shares 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 Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and Direxion Shares.
Diversification Opportunities for Franklin Templeton and Direxion Shares
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Direxion is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF 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 ETF are associated (or correlated) with Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Direxion Shares go up and down completely randomly.
Pair Corralation between Franklin Templeton and Direxion Shares
Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 0.32 times more return on investment than Direxion Shares. However, Franklin Templeton ETF is 3.09 times less risky than Direxion Shares. It trades about 0.06 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about -0.08 per unit of risk. If you would invest 2,093 in Franklin Templeton ETF on November 1, 2024 and sell it today you would earn a total of 609.57 from holding Franklin Templeton ETF or generate 29.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 37.55% |
| Values | Daily Returns |
Franklin Templeton ETF vs. Direxion Shares ETF
Performance |
| Timeline |
| Franklin Templeton ETF |
| Direxion Shares ETF |
Franklin Templeton and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and Direxion Shares
The main advantage of trading using opposite Franklin Templeton and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, Direxion Shares 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 Direxion Shares will offset losses from the drop in Direxion Shares' long position.| Franklin Templeton vs. Franklin Core Dividend | Franklin Templeton vs. Franklin International Core | Franklin Templeton vs. WisdomTree Trust | Franklin Templeton vs. First Trust Exchange Traded |
| Direxion Shares vs. Freedom Day Dividend | Direxion Shares vs. Franklin Templeton ETF | Direxion Shares vs. iShares MSCI China | Direxion Shares vs. Tidal Trust II |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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