Correlation Between Franklin Templeton and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and Dimensional ETF 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 Dimensional ETF 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 Dimensional ETF Trust, you can compare the effects of market volatilities on Franklin Templeton and Dimensional ETF 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 Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and Dimensional ETF.
Diversification Opportunities for Franklin Templeton and Dimensional ETF
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and Dimensional is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Dimensional ETF go up and down completely randomly.
Pair Corralation between Franklin Templeton and Dimensional ETF
Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 0.99 times more return on investment than Dimensional ETF. However, Franklin Templeton ETF is 1.01 times less risky than Dimensional ETF. It trades about -0.11 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about -0.14 per unit of risk. If you would invest 2,142 in Franklin Templeton ETF on August 23, 2024 and sell it today you would lose (18.00) from holding Franklin Templeton ETF or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Templeton ETF vs. Dimensional ETF Trust
Performance |
| Timeline |
| Franklin Templeton ETF |
| Dimensional ETF Trust |
Franklin Templeton and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and Dimensional ETF
The main advantage of trading using opposite Franklin Templeton and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF's long position.| Franklin Templeton vs. Hartford Short Duration | Franklin Templeton vs. American Century Diversified | Franklin Templeton vs. First Trust Short | Franklin Templeton vs. HUMANA INC |
| Dimensional ETF vs. Hartford Short Duration | Dimensional ETF vs. American Century Diversified | Dimensional ETF vs. First Trust Short | Dimensional ETF vs. HUMANA INC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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