Correlation Between Tema ETF and Franklin International
Can any of the company-specific risk be diversified away by investing in both Tema ETF and Franklin International 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 Tema ETF and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tema ETF Trust and Franklin International Core, you can compare the effects of market volatilities on Tema ETF and Franklin International 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 Tema ETF with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tema ETF and Franklin International.
Diversification Opportunities for Tema ETF and Franklin International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tema and Franklin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tema ETF Trust and Franklin International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Tema ETF 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 Tema ETF Trust are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Tema ETF i.e., Tema ETF and Franklin International go up and down completely randomly.
Pair Corralation between Tema ETF and Franklin International
Considering the 90-day investment horizon Tema ETF Trust is expected to under-perform the Franklin International. In addition to that, Tema ETF is 1.06 times more volatile than Franklin International Core. It trades about -0.19 of its total potential returns per unit of risk. Franklin International Core is currently generating about -0.18 per unit of volatility. If you would invest 3,155 in Franklin International Core on August 24, 2024 and sell it today you would lose (106.00) from holding Franklin International Core or give up 3.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tema ETF Trust vs. Franklin International Core
Performance |
| Timeline |
| Tema ETF Trust |
| Franklin International |
Tema ETF and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tema ETF and Franklin International
The main advantage of trading using opposite Tema ETF and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tema ETF position performs unexpectedly, Franklin International 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 International will offset losses from the drop in Franklin International's long position.| Tema ETF vs. Smith Nephew SNATS | Tema ETF vs. Fresenius Medical Care | Tema ETF vs. Fomento Economico Mexicano | Tema ETF vs. The Cooper Companies, |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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