Correlation Between Franklin FTSE and First Trust
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin FTSE Taiwan and First Trust Latin, you can compare the effects of market volatilities on Franklin FTSE and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and First Trust.
Diversification Opportunities for Franklin FTSE and First Trust
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and First is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Taiwan and First Trust Latin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Latin 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 Taiwan are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Latin has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and First Trust go up and down completely randomly.
Pair Corralation between Franklin FTSE and First Trust
Given the investment horizon of 90 days Franklin FTSE Taiwan is expected to generate 0.94 times more return on investment than First Trust. However, Franklin FTSE Taiwan is 1.07 times less risky than First Trust. It trades about 0.07 of its potential returns per unit of risk. First Trust Latin is currently generating about 0.02 per unit of risk. If you would invest 3,356 in Franklin FTSE Taiwan on August 26, 2024 and sell it today you would earn a total of 1,492 from holding Franklin FTSE Taiwan or generate 44.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin FTSE Taiwan vs. First Trust Latin
Performance |
| Timeline |
| Franklin FTSE Taiwan |
| First Trust Latin |
Franklin FTSE and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and First Trust
The main advantage of trading using opposite Franklin FTSE and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Franklin FTSE vs. iShares MSCI Singapore | Franklin FTSE vs. iShares MSCI Taiwan | Franklin FTSE vs. iShares MSCI Malaysia | Franklin FTSE vs. iShares MSCI Australia |
| First Trust vs. iShares China Large Cap | First Trust vs. iShares MSCI Mexico | First Trust vs. iShares MSCI South | First Trust vs. iShares MSCI Japan |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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