Correlation Between Franklin FTSE and CHIS
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and CHIS 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 CHIS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin FTSE South and CHIS, you can compare the effects of market volatilities on Franklin FTSE and CHIS 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 CHIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and CHIS.
Diversification Opportunities for Franklin FTSE and CHIS
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and CHIS is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE South and CHIS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIS 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 South are associated (or correlated) with CHIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIS has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and CHIS go up and down completely randomly.
Pair Corralation between Franklin FTSE and CHIS
Given the investment horizon of 90 days Franklin FTSE South is expected to under-perform the CHIS. In addition to that, Franklin FTSE is 1.06 times more volatile than CHIS. It trades about -0.02 of its total potential returns per unit of risk. CHIS is currently generating about 0.02 per unit of volatility. If you would invest 1,971 in CHIS on September 4, 2024 and sell it today you would earn a total of 10.00 from holding CHIS or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 8.04% |
| Values | Daily Returns |
Franklin FTSE South vs. CHIS
Performance |
| Timeline |
| Franklin FTSE South |
| CHIS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Franklin FTSE and CHIS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and CHIS
The main advantage of trading using opposite Franklin FTSE and CHIS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, CHIS 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 CHIS will offset losses from the drop in CHIS's long position.| Franklin FTSE vs. iShares MSCI Hong | Franklin FTSE vs. iShares MSCI Australia | Franklin FTSE vs. iShares MSCI Taiwan |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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