Correlation Between NYSE Composite and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Franklin FTSE 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 NYSE Composite and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Franklin FTSE China, you can compare the effects of market volatilities on NYSE Composite and Franklin FTSE 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 NYSE Composite with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Franklin FTSE.
Diversification Opportunities for NYSE Composite and Franklin FTSE
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Franklin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Franklin FTSE China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE China and NYSE Composite 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 NYSE Composite are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE China has no effect on the direction of NYSE Composite i.e., NYSE Composite and Franklin FTSE go up and down completely randomly.
Pair Corralation between NYSE Composite and Franklin FTSE
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.29 times more return on investment than Franklin FTSE. However, NYSE Composite is 3.43 times less risky than Franklin FTSE. It trades about 0.42 of its potential returns per unit of risk. Franklin FTSE China is currently generating about -0.07 per unit of risk. If you would invest 1,923,895 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 103,309 from holding NYSE Composite or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Franklin FTSE China
Performance |
| Timeline |
NYSE Composite and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Franklin FTSE China
Pair trading matchups for Franklin FTSE
Pair Trading with NYSE Composite and Franklin FTSE
The main advantage of trading using opposite NYSE Composite and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Franklin FTSE 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 FTSE will offset losses from the drop in Franklin FTSE's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Franklin FTSE vs. Xtrackers Harvest CSI | Franklin FTSE vs. Aquagold International | Franklin FTSE vs. Thrivent High Yield | Franklin FTSE vs. Morningstar Unconstrained Allocation |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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