Correlation Between Franklin FTSE and WisdomTree China
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and WisdomTree China 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 WisdomTree China 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 WisdomTree China ex State Owned, you can compare the effects of market volatilities on Franklin FTSE and WisdomTree China 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 WisdomTree China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and WisdomTree China.
Diversification Opportunities for Franklin FTSE and WisdomTree China
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and WisdomTree is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE South and WisdomTree China ex State Owne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree China 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 WisdomTree China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree China has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and WisdomTree China go up and down completely randomly.
Pair Corralation between Franklin FTSE and WisdomTree China
Given the investment horizon of 90 days Franklin FTSE South is expected to generate 0.61 times more return on investment than WisdomTree China. However, Franklin FTSE South is 1.65 times less risky than WisdomTree China. It trades about -0.09 of its potential returns per unit of risk. WisdomTree China ex State Owned is currently generating about -0.08 per unit of risk. If you would invest 1,975 in Franklin FTSE South on September 1, 2024 and sell it today you would lose (59.00) from holding Franklin FTSE South or give up 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin FTSE South vs. WisdomTree China ex State Owne
Performance |
| Timeline |
| Franklin FTSE South |
| WisdomTree China |
Franklin FTSE and WisdomTree China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and WisdomTree China
The main advantage of trading using opposite Franklin FTSE and WisdomTree China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, WisdomTree China 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 WisdomTree China will offset losses from the drop in WisdomTree China's long position.| Franklin FTSE vs. HUMANA INC | Franklin FTSE vs. SCOR PK | Franklin FTSE vs. Aquagold International | Franklin FTSE vs. Ab Pennsylvania Portfolio |
| WisdomTree China vs. Global X MSCI | WisdomTree China vs. WisdomTree Emerging Markets | WisdomTree China vs. Invesco China Technology | WisdomTree China vs. iShares MSCI China |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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