Correlation Between Invesco NASDAQ and Franklin Focused
Can any of the company-specific risk be diversified away by investing in both Invesco NASDAQ and Franklin Focused 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 Invesco NASDAQ and Franklin Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco NASDAQ 100 and Franklin Focused Growth, you can compare the effects of market volatilities on Invesco NASDAQ and Franklin Focused 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 Invesco NASDAQ with a short position of Franklin Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco NASDAQ and Franklin Focused.
Diversification Opportunities for Invesco NASDAQ and Franklin Focused
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and Franklin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Invesco NASDAQ 100 and Franklin Focused Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Focused Growth and Invesco NASDAQ 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 Invesco NASDAQ 100 are associated (or correlated) with Franklin Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Focused Growth has no effect on the direction of Invesco NASDAQ i.e., Invesco NASDAQ and Franklin Focused go up and down completely randomly.
Pair Corralation between Invesco NASDAQ and Franklin Focused
Given the investment horizon of 90 days Invesco NASDAQ is expected to generate 1.27 times less return on investment than Franklin Focused. But when comparing it to its historical volatility, Invesco NASDAQ 100 is 1.21 times less risky than Franklin Focused. It trades about 0.12 of its potential returns per unit of risk. Franklin Focused Growth is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,572 in Franklin Focused Growth on November 9, 2024 and sell it today you would earn a total of 1,600 from holding Franklin Focused Growth or generate 62.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 63.69% |
| Values | Daily Returns |
Invesco NASDAQ 100 vs. Franklin Focused Growth
Performance |
| Timeline |
| Invesco NASDAQ 100 |
| Franklin Focused Growth |
Invesco NASDAQ and Franklin Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco NASDAQ and Franklin Focused
The main advantage of trading using opposite Invesco NASDAQ and Franklin Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco NASDAQ position performs unexpectedly, Franklin Focused 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 Focused will offset losses from the drop in Franklin Focused's long position.| Invesco NASDAQ vs. Invesco NASDAQ Next | Invesco NASDAQ vs. SPDR Portfolio SP | Invesco NASDAQ vs. SPDR Portfolio SP | Invesco NASDAQ vs. Schwab Dividend Equity |
| Franklin Focused vs. Davis Select International | Franklin Focused vs. Tidal ETF Trust | Franklin Focused vs. Principal Value ETF | Franklin Focused vs. WisdomTree Emerging Markets |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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