Correlation Between First Trust and Franklin Exponential
Can any of the company-specific risk be diversified away by investing in both First Trust and Franklin Exponential 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 First Trust and Franklin Exponential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dow and Franklin Exponential Data, you can compare the effects of market volatilities on First Trust and Franklin Exponential 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 First Trust with a short position of Franklin Exponential. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Franklin Exponential.
Diversification Opportunities for First Trust and Franklin Exponential
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dow and Franklin Exponential Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Exponential Data and First Trust 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 First Trust Dow are associated (or correlated) with Franklin Exponential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Exponential Data has no effect on the direction of First Trust i.e., First Trust and Franklin Exponential go up and down completely randomly.
Pair Corralation between First Trust and Franklin Exponential
Considering the 90-day investment horizon First Trust Dow is expected to generate 0.89 times more return on investment than Franklin Exponential. However, First Trust Dow is 1.12 times less risky than Franklin Exponential. It trades about 0.41 of its potential returns per unit of risk. Franklin Exponential Data is currently generating about 0.32 per unit of risk. If you would invest 21,869 in First Trust Dow on August 29, 2024 and sell it today you would earn a total of 2,497 from holding First Trust Dow or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Dow vs. Franklin Exponential Data
Performance |
| Timeline |
| First Trust Dow |
| Franklin Exponential Data |
First Trust and Franklin Exponential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Franklin Exponential
The main advantage of trading using opposite First Trust and Franklin Exponential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Franklin Exponential 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 Exponential will offset losses from the drop in Franklin Exponential's long position.| First Trust vs. First Trust Cloud | First Trust vs. iShares Expanded Tech Software | First Trust vs. Invesco NASDAQ Internet | First Trust vs. First Trust NASDAQ 100 Technology |
| Franklin Exponential vs. Franklin Disruptive Commerce | Franklin Exponential vs. Franklin Templeton ETF | Franklin Exponential vs. Esoterica NextG Economy | Franklin Exponential vs. TrueShares Technology AI |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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