Correlation Between Franklin Templeton and FFEM
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and FFEM 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 FFEM 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 FFEM, you can compare the effects of market volatilities on Franklin Templeton and FFEM 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 FFEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and FFEM.
Diversification Opportunities for Franklin Templeton and FFEM
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and FFEM is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and FFEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFEM 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 FFEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFEM has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and FFEM go up and down completely randomly.
Pair Corralation between Franklin Templeton and FFEM
Given the investment horizon of 90 days Franklin Templeton is expected to generate 1.91 times less return on investment than FFEM. In addition to that, Franklin Templeton is 1.31 times more volatile than FFEM. It trades about 0.05 of its total potential returns per unit of risk. FFEM is currently generating about 0.11 per unit of volatility. If you would invest 2,500 in FFEM on September 13, 2024 and sell it today you would earn a total of 40.00 from holding FFEM or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 13.6% |
| Values | Daily Returns |
Franklin Templeton ETF vs. FFEM
Performance |
| Timeline |
| Franklin Templeton ETF |
| FFEM |
Franklin Templeton and FFEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and FFEM
The main advantage of trading using opposite Franklin Templeton and FFEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, FFEM 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 FFEM will offset losses from the drop in FFEM's 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 |
| FFEM vs. Global X MSCI | FFEM vs. Global X Alternative | FFEM vs. iShares Emerging Markets | FFEM vs. Global X SuperDividend |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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