Correlation Between First Trust and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both First Trust and Franklin FTSE 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 First Trust and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Asia and Franklin FTSE Brazil, you can compare the effects of market volatilities on First Trust and Franklin FTSE 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 First Trust with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Franklin FTSE.
Diversification Opportunities for First Trust and Franklin FTSE
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Franklin is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Asia and Franklin FTSE Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Brazil and First Trust 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 First Trust Asia are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Brazil has no effect on the direction of First Trust i.e., First Trust and Franklin FTSE go up and down completely randomly.
Pair Corralation between First Trust and Franklin FTSE
Considering the 90-day investment horizon First Trust Asia is expected to generate 0.85 times more return on investment than Franklin FTSE. However, First Trust Asia is 1.17 times less risky than Franklin FTSE. It trades about 0.04 of its potential returns per unit of risk. Franklin FTSE Brazil is currently generating about -0.26 per unit of risk. If you would invest 2,954 in First Trust Asia on September 3, 2024 and sell it today you would earn a total of 24.00 from holding First Trust Asia or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Asia vs. Franklin FTSE Brazil
Performance |
| Timeline |
| First Trust Asia |
| Franklin FTSE Brazil |
First Trust and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Franklin FTSE
The main advantage of trading using opposite First Trust and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Franklin FTSE 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 Franklin FTSE will offset losses from the drop in Franklin FTSE's long position.| First Trust vs. JPMorgan BetaBuilders Developed | First Trust vs. iShares MSCI All | First Trust vs. iShares MSCI Pacific | First Trust vs. iShares Asia 50 |
| Franklin FTSE vs. First Trust Brazil | Franklin FTSE vs. First Trust Asia | Franklin FTSE vs. First Trust Japan | Franklin FTSE vs. First Trust Germany |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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