Correlation Between Franklin International and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both Franklin International and WisdomTree 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 Franklin International and WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin International Low and WisdomTree International Hedged, you can compare the effects of market volatilities on Franklin International and WisdomTree 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 Franklin International with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin International and WisdomTree International.
Diversification Opportunities for Franklin International and WisdomTree International
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and WisdomTree is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Franklin International Low and WisdomTree International Hedge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and Franklin International 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 International Low are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of Franklin International i.e., Franklin International and WisdomTree International go up and down completely randomly.
Pair Corralation between Franklin International and WisdomTree International
Given the investment horizon of 90 days Franklin International Low is expected to generate 0.81 times more return on investment than WisdomTree International. However, Franklin International Low is 1.23 times less risky than WisdomTree International. It trades about 0.08 of its potential returns per unit of risk. WisdomTree International Hedged is currently generating about 0.04 per unit of risk. If you would invest 3,088 in Franklin International Low on September 1, 2024 and sell it today you would earn a total of 29.00 from holding Franklin International Low or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin International Low vs. WisdomTree International Hedge
Performance |
| Timeline |
| Franklin International |
| WisdomTree International |
Franklin International and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin International and WisdomTree International
The main advantage of trading using opposite Franklin International and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin International position performs unexpectedly, WisdomTree 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 WisdomTree International will offset losses from the drop in WisdomTree International's long position.| Franklin International vs. Legg Mason Low | Franklin International vs. Xtrackers MSCI EAFE | Franklin International vs. Invesco SP SmallCap | Franklin International vs. WisdomTree International Hedged |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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