Correlation Between Tidal Trust and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Tidal 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 Tidal 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 Tidal Trust II and Franklin Templeton ETF, you can compare the effects of market volatilities on Tidal 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 Tidal Trust with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and Franklin Templeton.
Diversification Opportunities for Tidal Trust and Franklin Templeton
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tidal and Franklin is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II 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 Tidal 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 Tidal Trust II 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 Tidal Trust i.e., Tidal Trust and Franklin Templeton go up and down completely randomly.
Pair Corralation between Tidal Trust and Franklin Templeton
Given the investment horizon of 90 days Tidal Trust II is expected to generate 1.79 times more return on investment than Franklin Templeton. However, Tidal Trust is 1.79 times more volatile than Franklin Templeton ETF. It trades about 0.15 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 2,391 in Tidal Trust II on September 1, 2024 and sell it today you would earn a total of 135.00 from holding Tidal Trust II or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tidal Trust II vs. Franklin Templeton ETF
Performance |
| Timeline |
| Tidal Trust II |
| Franklin Templeton ETF |
Tidal Trust and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and Franklin Templeton
The main advantage of trading using opposite Tidal Trust and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal 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.| Tidal Trust vs. Global X SP | Tidal Trust vs. Amplify CWP Enhanced | Tidal Trust vs. JPMorgan Equity Premium |
| Franklin Templeton vs. Xtrackers MSCI Emerging | Franklin Templeton vs. FlexShares Morningstar Emerging | Franklin Templeton vs. First Trust Emerging |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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