Correlation Between Franklin FTSE and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio Europe, you can compare the effects of market volatilities on Franklin FTSE and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and SPDR Portfolio.
Diversification Opportunities for Franklin FTSE and SPDR Portfolio
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and SPDR is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Europe and SPDR Portfolio Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Europe 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Europe has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Franklin FTSE and SPDR Portfolio
Given the investment horizon of 90 days Franklin FTSE is expected to generate 1.01 times less return on investment than SPDR Portfolio. But when comparing it to its historical volatility, Franklin FTSE Europe is 1.02 times less risky than SPDR Portfolio. It trades about 0.08 of its potential returns per unit of risk. SPDR Portfolio Europe is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,511 in SPDR Portfolio Europe on September 1, 2024 and sell it today you would earn a total of 598.00 from holding SPDR Portfolio Europe or generate 17.03% 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 Europe vs. SPDR Portfolio Europe
Performance |
| Timeline |
| Franklin FTSE Europe |
| SPDR Portfolio Europe |
Franklin FTSE and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and SPDR Portfolio
The main advantage of trading using opposite Franklin FTSE and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio'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 |
| SPDR Portfolio vs. Pacer Trendpilot Mid | SPDR Portfolio vs. Pacer Trendpilot Large | SPDR Portfolio vs. Pacer Trendpilot 100 | SPDR Portfolio vs. Pacer Trendpilot International |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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