Correlation Between Franklin Templeton and ETRACS IFED
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and ETRACS IFED 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 ETRACS IFED 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 ETRACS IFED Invest, you can compare the effects of market volatilities on Franklin Templeton and ETRACS IFED 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 ETRACS IFED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and ETRACS IFED.
Diversification Opportunities for Franklin Templeton and ETRACS IFED
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and ETRACS is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and ETRACS IFED Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS IFED Invest 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 ETRACS IFED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS IFED Invest has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and ETRACS IFED go up and down completely randomly.
Pair Corralation between Franklin Templeton and ETRACS IFED
Given the investment horizon of 90 days Franklin Templeton ETF is expected to under-perform the ETRACS IFED. But the etf apears to be less risky and, when comparing its historical volatility, Franklin Templeton ETF is 1.07 times less risky than ETRACS IFED. The etf trades about -0.05 of its potential returns per unit of risk. The ETRACS IFED Invest is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 3,891 in ETRACS IFED Invest on September 1, 2024 and sell it today you would earn a total of 382.00 from holding ETRACS IFED Invest or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Templeton ETF vs. ETRACS IFED Invest
Performance |
| Timeline |
| Franklin Templeton ETF |
| ETRACS IFED Invest |
Franklin Templeton and ETRACS IFED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and ETRACS IFED
The main advantage of trading using opposite Franklin Templeton and ETRACS IFED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, ETRACS IFED 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 ETRACS IFED will offset losses from the drop in ETRACS IFED's long position.| Franklin Templeton vs. Xtrackers MSCI Emerging | Franklin Templeton vs. FlexShares Morningstar Emerging | Franklin Templeton vs. First Trust Emerging |
| ETRACS IFED vs. Vanguard Total Stock | ETRACS IFED vs. SPDR SP 500 | ETRACS IFED vs. iShares Core SP | ETRACS IFED vs. Vanguard Dividend Appreciation |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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