Correlation Between First Trust and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both First Trust and Franklin Templeton 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 Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Emerging and Franklin Templeton ETF, you can compare the effects of market volatilities on First Trust and Franklin Templeton 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 Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Franklin Templeton.
Diversification Opportunities for First Trust and Franklin Templeton
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Franklin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Emerging and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF 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 Emerging are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton ETF has no effect on the direction of First Trust i.e., First Trust and Franklin Templeton go up and down completely randomly.
Pair Corralation between First Trust and Franklin Templeton
Considering the 90-day investment horizon First Trust is expected to generate 1.54 times less return on investment than Franklin Templeton. In addition to that, First Trust is 1.06 times more volatile than Franklin Templeton ETF. It trades about 0.03 of its total potential returns per unit of risk. Franklin Templeton ETF is currently generating about 0.05 per unit of volatility. If you would invest 2,226 in Franklin Templeton ETF on September 3, 2024 and sell it today you would earn a total of 467.00 from holding Franklin Templeton ETF or generate 20.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Emerging vs. Franklin Templeton ETF
Performance |
| Timeline |
| First Trust Emerging |
| Franklin Templeton ETF |
First Trust and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Franklin Templeton
The main advantage of trading using opposite First Trust and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.| First Trust vs. First Trust Developed | First Trust vs. First Trust Emerging | First Trust vs. First Trust Europe | First Trust vs. First Trust Large |
| Franklin Templeton vs. Franklin Core Dividend | Franklin Templeton vs. Franklin International Core | Franklin Templeton vs. WisdomTree Trust | Franklin Templeton vs. First Trust Exchange Traded |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |