Correlation Between First Trust and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both First Trust and Franklin Templeton 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 Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Franklin Templeton ETF, you can compare the effects of market volatilities on First Trust and Franklin Templeton 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 Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Franklin Templeton.
Diversification Opportunities for First Trust and Franklin Templeton
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Franklin is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF 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 Exchange Traded are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton ETF has no effect on the direction of First Trust i.e., First Trust and Franklin Templeton go up and down completely randomly.
Pair Corralation between First Trust and Franklin Templeton
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.41 times more return on investment than Franklin Templeton. However, First Trust Exchange Traded is 2.45 times less risky than Franklin Templeton. It trades about 0.13 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about 0.05 per unit of risk. If you would invest 3,079 in First Trust Exchange Traded on November 2, 2024 and sell it today you would earn a total of 831.00 from holding First Trust Exchange Traded or generate 26.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Franklin Templeton ETF
Performance |
| Timeline |
| First Trust Exchange |
| Franklin Templeton ETF |
First Trust and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Franklin Templeton
The main advantage of trading using opposite First Trust and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust vs. First Trust Exchange Traded |
| Franklin Templeton vs. Franklin Core Dividend | Franklin Templeton vs. Franklin International Core | Franklin Templeton vs. WisdomTree Trust | Franklin Templeton vs. First Trust Exchange Traded |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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