Correlation Between Franklin Templeton and ETRACS 2x
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and ETRACS 2x 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 2x 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 2x Leveraged, you can compare the effects of market volatilities on Franklin Templeton and ETRACS 2x 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 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and ETRACS 2x.
Diversification Opportunities for Franklin Templeton and ETRACS 2x
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and ETRACS is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and ETRACS 2x Leveraged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS 2x Leveraged 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 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS 2x Leveraged has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and ETRACS 2x go up and down completely randomly.
Pair Corralation between Franklin Templeton and ETRACS 2x
Given the investment horizon of 90 days Franklin Templeton ETF is expected to under-perform the ETRACS 2x. But the etf apears to be less risky and, when comparing its historical volatility, Franklin Templeton ETF is 1.49 times less risky than ETRACS 2x. The etf trades about -0.06 of its potential returns per unit of risk. The ETRACS 2x Leveraged is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 4,089 in ETRACS 2x Leveraged on September 2, 2024 and sell it today you would earn a total of 394.00 from holding ETRACS 2x Leveraged or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Templeton ETF vs. ETRACS 2x Leveraged
Performance |
| Timeline |
| Franklin Templeton ETF |
| ETRACS 2x Leveraged |
Franklin Templeton and ETRACS 2x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and ETRACS 2x
The main advantage of trading using opposite Franklin Templeton and ETRACS 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, ETRACS 2x 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 2x will offset losses from the drop in ETRACS 2x'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 |
| ETRACS 2x vs. Franklin Templeton ETF | ETRACS 2x vs. Altrius Global Dividend | ETRACS 2x vs. Invesco Exchange Traded | ETRACS 2x vs. Franklin International Core |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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