Correlation Between Franklin FTSE and JPMorgan BetaBuilders
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin FTSE Japan and JPMorgan BetaBuilders Japan, you can compare the effects of market volatilities on Franklin FTSE and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and JPMorgan BetaBuilders.
Diversification Opportunities for Franklin FTSE and JPMorgan BetaBuilders
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and JPMorgan is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Japan and JPMorgan BetaBuilders Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders 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 Japan are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and JPMorgan BetaBuilders go up and down completely randomly.
Pair Corralation between Franklin FTSE and JPMorgan BetaBuilders
Given the investment horizon of 90 days Franklin FTSE is expected to generate 1.08 times less return on investment than JPMorgan BetaBuilders. But when comparing it to its historical volatility, Franklin FTSE Japan is 1.0 times less risky than JPMorgan BetaBuilders. It trades about 0.07 of its potential returns per unit of risk. JPMorgan BetaBuilders Japan is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,603 in JPMorgan BetaBuilders Japan on August 28, 2024 and sell it today you would earn a total of 66.00 from holding JPMorgan BetaBuilders Japan or generate 1.18% 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 Japan vs. JPMorgan BetaBuilders Japan
Performance |
| Timeline |
| Franklin FTSE Japan |
| JPMorgan BetaBuilders |
Franklin FTSE and JPMorgan BetaBuilders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and JPMorgan BetaBuilders
The main advantage of trading using opposite Franklin FTSE and JPMorgan BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, JPMorgan BetaBuilders 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 JPMorgan BetaBuilders will offset losses from the drop in JPMorgan BetaBuilders' long position.| Franklin FTSE vs. iShares MSCI South | Franklin FTSE vs. iShares MSCI Hong | Franklin FTSE vs. iShares MSCI Taiwan | Franklin FTSE vs. iShares MSCI Germany |
| JPMorgan BetaBuilders vs. iShares MSCI South | JPMorgan BetaBuilders vs. iShares MSCI Hong | JPMorgan BetaBuilders vs. iShares MSCI Taiwan | JPMorgan BetaBuilders vs. iShares MSCI Germany |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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