Correlation Between Franklin FTSE and Matthews International
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and Matthews International 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 Matthews International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin FTSE Europe and Matthews International Funds, you can compare the effects of market volatilities on Franklin FTSE and Matthews International 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 Matthews International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and Matthews International.
Diversification Opportunities for Franklin FTSE and Matthews International
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Matthews is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Europe and Matthews International Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International 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 Europe are associated (or correlated) with Matthews International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews International has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and Matthews International go up and down completely randomly.
Pair Corralation between Franklin FTSE and Matthews International
Given the investment horizon of 90 days Franklin FTSE Europe is expected to under-perform the Matthews International. But the etf apears to be less risky and, when comparing its historical volatility, Franklin FTSE Europe is 1.7 times less risky than Matthews International. The etf trades about -0.09 of its potential returns per unit of risk. The Matthews International Funds is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,566 in Matthews International Funds on September 3, 2024 and sell it today you would earn a total of 132.00 from holding Matthews International Funds or generate 5.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin FTSE Europe vs. Matthews International Funds
Performance |
| Timeline |
| Franklin FTSE Europe |
| Matthews International |
Franklin FTSE and Matthews International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and Matthews International
The main advantage of trading using opposite Franklin FTSE and Matthews International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, Matthews International 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 Matthews International will offset losses from the drop in Matthews International's long position.| Franklin FTSE vs. Franklin FTSE United | Franklin FTSE vs. SPDR Portfolio Europe | Franklin FTSE vs. Franklin FTSE Germany | Franklin FTSE vs. Franklin FTSE Japan |
| Matthews International vs. JPMorgan BetaBuilders Developed | Matthews International vs. iShares MSCI All | Matthews International vs. iShares MSCI Pacific | Matthews International vs. iShares Asia 50 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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