Correlation Between Roundhill Magnificent and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Roundhill Magnificent 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 Roundhill Magnificent and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundhill Magnificent Seven and Franklin Templeton ETF, you can compare the effects of market volatilities on Roundhill Magnificent 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 Roundhill Magnificent with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Magnificent and Franklin Templeton.
Diversification Opportunities for Roundhill Magnificent and Franklin Templeton
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Roundhill and Franklin is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Magnificent Seven 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 Roundhill Magnificent 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 Roundhill Magnificent Seven 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 Roundhill Magnificent i.e., Roundhill Magnificent and Franklin Templeton go up and down completely randomly.
Pair Corralation between Roundhill Magnificent and Franklin Templeton
Given the investment horizon of 90 days Roundhill Magnificent Seven is expected to generate 4.89 times more return on investment than Franklin Templeton. However, Roundhill Magnificent is 4.89 times more volatile than Franklin Templeton ETF. It trades about 0.16 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about -0.1 per unit of risk. If you would invest 4,835 in Roundhill Magnificent Seven on August 25, 2024 and sell it today you would earn a total of 269.00 from holding Roundhill Magnificent Seven or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roundhill Magnificent Seven vs. Franklin Templeton ETF
Performance |
| Timeline |
| Roundhill Magnificent |
| Franklin Templeton ETF |
Roundhill Magnificent and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundhill Magnificent and Franklin Templeton
The main advantage of trading using opposite Roundhill Magnificent and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Magnificent 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.| Roundhill Magnificent vs. Invesco DWA Utilities | Roundhill Magnificent vs. Invesco Dynamic Large | Roundhill Magnificent vs. Invesco Dynamic Large | Roundhill Magnificent vs. HUMANA INC |
| Franklin Templeton vs. Franklin Liberty Investment | Franklin Templeton vs. iShares ESG Aggregate | Franklin Templeton vs. Franklin LibertyQ Equity | Franklin Templeton vs. Franklin Liberty Short |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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