Correlation Between Franklin FTSE and SmartETFs Asia
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and SmartETFs Asia 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 FTSE and SmartETFs Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin FTSE Asia and SmartETFs Asia Pacific, you can compare the effects of market volatilities on Franklin FTSE and SmartETFs Asia 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 FTSE with a short position of SmartETFs Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and SmartETFs Asia.
Diversification Opportunities for Franklin FTSE and SmartETFs Asia
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and SmartETFs is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Asia and SmartETFs Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Asia Pacific and Franklin FTSE 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 FTSE Asia are associated (or correlated) with SmartETFs Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Asia Pacific has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and SmartETFs Asia go up and down completely randomly.
Pair Corralation between Franklin FTSE and SmartETFs Asia
Given the investment horizon of 90 days Franklin FTSE is expected to generate 1.42 times less return on investment than SmartETFs Asia. In addition to that, Franklin FTSE is 1.01 times more volatile than SmartETFs Asia Pacific. It trades about 0.04 of its total potential returns per unit of risk. SmartETFs Asia Pacific is currently generating about 0.06 per unit of volatility. If you would invest 1,285 in SmartETFs Asia Pacific on August 31, 2024 and sell it today you would earn a total of 268.00 from holding SmartETFs Asia Pacific or generate 20.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin FTSE Asia vs. SmartETFs Asia Pacific
Performance |
| Timeline |
| Franklin FTSE Asia |
| SmartETFs Asia Pacific |
Franklin FTSE and SmartETFs Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and SmartETFs Asia
The main advantage of trading using opposite Franklin FTSE and SmartETFs Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, SmartETFs Asia 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 SmartETFs Asia will offset losses from the drop in SmartETFs Asia's long position.| Franklin FTSE vs. Franklin FTSE Australia | Franklin FTSE vs. Franklin FTSE Japan | Franklin FTSE vs. Franklin FTSE Japan | Franklin FTSE vs. Franklin FTSE India |
| SmartETFs Asia vs. SmartETFs Dividend Builder | SmartETFs Asia vs. Anfield Dynamic Fixed | SmartETFs Asia vs. Anfield Universal Fixed | SmartETFs Asia vs. Aptus Drawdown Managed |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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