Correlation Between SPDR SP and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Kensho and Franklin Templeton ETF, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Franklin Templeton.
Diversification Opportunities for SPDR SP and Franklin Templeton
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Franklin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Kensho 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 SPDR SP 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 SPDR SP Kensho 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 SPDR SP i.e., SPDR SP and Franklin Templeton go up and down completely randomly.
Pair Corralation between SPDR SP and Franklin Templeton
Given the investment horizon of 90 days SPDR SP Kensho is expected to generate 1.56 times more return on investment than Franklin Templeton. However, SPDR SP is 1.56 times more volatile than Franklin Templeton ETF. It trades about -0.04 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about -0.15 per unit of risk. If you would invest 2,863 in SPDR SP Kensho on August 27, 2024 and sell it today you would lose (47.00) from holding SPDR SP Kensho or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Kensho vs. Franklin Templeton ETF
Performance |
| Timeline |
| SPDR SP Kensho |
| Franklin Templeton ETF |
SPDR SP and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Franklin Templeton
The main advantage of trading using opposite SPDR SP and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. iShares Dividend and | SPDR SP vs. Martin Currie Sustainable | SPDR SP vs. VictoryShares THB Mid | SPDR SP vs. Mast Global Battery |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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