Correlation Between Franklin Templeton and Overlay Shares
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and Overlay Shares 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 Overlay Shares 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 Overlay Shares Core, you can compare the effects of market volatilities on Franklin Templeton and Overlay Shares 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 Overlay Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and Overlay Shares.
Diversification Opportunities for Franklin Templeton and Overlay Shares
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Overlay is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Overlay Shares Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overlay Shares Core 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 Overlay Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overlay Shares Core has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Overlay Shares go up and down completely randomly.
Pair Corralation between Franklin Templeton and Overlay Shares
Given the investment horizon of 90 days Franklin Templeton is expected to generate 1.55 times less return on investment than Overlay Shares. But when comparing it to its historical volatility, Franklin Templeton ETF is 1.25 times less risky than Overlay Shares. It trades about 0.03 of its potential returns per unit of risk. Overlay Shares Core is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,894 in Overlay Shares Core on August 23, 2024 and sell it today you would earn a total of 169.00 from holding Overlay Shares Core or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Templeton ETF vs. Overlay Shares Core
Performance |
| Timeline |
| Franklin Templeton ETF |
| Overlay Shares Core |
Franklin Templeton and Overlay Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and Overlay Shares
The main advantage of trading using opposite Franklin Templeton and Overlay Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, Overlay Shares 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 Overlay Shares will offset losses from the drop in Overlay Shares' 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 |
| Overlay Shares vs. Hartford Short Duration | Overlay Shares vs. American Century Diversified | Overlay Shares vs. First Trust Short | Overlay Shares 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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