Correlation Between Franklin FTSE and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and Leverage Shares 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 Leverage Shares 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 Leverage Shares 3x, you can compare the effects of market volatilities on Franklin FTSE and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and Leverage Shares.
Diversification Opportunities for Franklin FTSE and Leverage Shares
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Leverage is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Asia and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and Leverage Shares go up and down completely randomly.
Pair Corralation between Franklin FTSE and Leverage Shares
Assuming the 90 days trading horizon Franklin FTSE Asia is expected to under-perform the Leverage Shares. But the etf apears to be less risky and, when comparing its historical volatility, Franklin FTSE Asia is 14.45 times less risky than Leverage Shares. The etf trades about -0.06 of its potential returns per unit of risk. The Leverage Shares 3x is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 508,110 in Leverage Shares 3x on September 3, 2024 and sell it today you would earn a total of 3,243,965 from holding Leverage Shares 3x or generate 638.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin FTSE Asia vs. Leverage Shares 3x
Performance |
| Timeline |
| Franklin FTSE Asia |
| Leverage Shares 3x |
Franklin FTSE and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and Leverage Shares
The main advantage of trading using opposite Franklin FTSE and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.| Franklin FTSE vs. Franklin LibertyQ Global | Franklin FTSE vs. Franklin Libertyshares ICAV | Franklin FTSE vs. Franklin FTSE Brazil | Franklin FTSE vs. Franklin LibertyQ AC |
| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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