Correlation Between Franklin FTSE and WisdomTree Natural
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and WisdomTree Natural 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 Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin FTSE Asia and WisdomTree Natural Gas, you can compare the effects of market volatilities on Franklin FTSE and WisdomTree Natural 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 Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and WisdomTree Natural.
Diversification Opportunities for Franklin FTSE and WisdomTree Natural
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and WisdomTree is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Asia and WisdomTree Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Natural Gas 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 Asia are associated (or correlated) with WisdomTree Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Natural Gas has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and WisdomTree Natural go up and down completely randomly.
Pair Corralation between Franklin FTSE and WisdomTree Natural
Assuming the 90 days trading horizon Franklin FTSE Asia is expected to under-perform the WisdomTree Natural. But the etf apears to be less risky and, when comparing its historical volatility, Franklin FTSE Asia is 13.09 times less risky than WisdomTree Natural. The etf trades about -0.11 of its potential returns per unit of risk. The WisdomTree Natural Gas is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 95,982 in WisdomTree Natural Gas on September 5, 2024 and sell it today you would earn a total of 8,593 from holding WisdomTree Natural Gas or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin FTSE Asia vs. WisdomTree Natural Gas
Performance |
| Timeline |
| Franklin FTSE Asia |
| WisdomTree Natural Gas |
Franklin FTSE and WisdomTree Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and WisdomTree Natural
The main advantage of trading using opposite Franklin FTSE and WisdomTree Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, WisdomTree Natural 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 Natural will offset losses from the drop in WisdomTree Natural's long position.| Franklin FTSE vs. WisdomTree Natural Gas | Franklin FTSE vs. WisdomTree Natural Gas | Franklin FTSE vs. Leverage Shares 2x | Franklin FTSE vs. WisdomTree Silver 3x |
| WisdomTree Natural vs. WisdomTree Natural Gas | WisdomTree Natural vs. Leverage Shares 2x | WisdomTree Natural vs. WisdomTree Silver 3x | WisdomTree Natural vs. Leverage Shares 2x |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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