Correlation Between Franklin Large and Global X
Can any of the company-specific risk be diversified away by investing in both Franklin Large and Global X 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 Large and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Large Cap and Global X Active, you can compare the effects of market volatilities on Franklin Large and Global X 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 Large with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Large and Global X.
Diversification Opportunities for Franklin Large and Global X
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Global is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Large Cap and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and Franklin Large 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 Large Cap are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Active has no effect on the direction of Franklin Large i.e., Franklin Large and Global X go up and down completely randomly.
Pair Corralation between Franklin Large and Global X
Assuming the 90 days trading horizon Franklin Large Cap is expected to generate 1.67 times more return on investment than Global X. However, Franklin Large is 1.67 times more volatile than Global X Active. It trades about 0.12 of its potential returns per unit of risk. Global X Active is currently generating about 0.06 per unit of risk. If you would invest 3,168 in Franklin Large Cap on August 25, 2024 and sell it today you would earn a total of 1,673 from holding Franklin Large Cap or generate 52.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Large Cap vs. Global X Active
Performance |
| Timeline |
| Franklin Large Cap |
| Global X Active |
Franklin Large and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Large and Global X
The main advantage of trading using opposite Franklin Large and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Large position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Franklin Large vs. Franklin Bissett Corporate | Franklin Large vs. FT AlphaDEX Industrials | Franklin Large vs. Dynamic Active Dividend |
| Global X vs. Franklin Global Aggregate | Global X vs. Franklin Large Cap | Global X vs. First Trust Senior | Global X vs. BMO Aggregate Bond |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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