Correlation Between First Trust and Franklin International
Can any of the company-specific risk be diversified away by investing in both First Trust and Franklin 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 First Trust and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Franklin International Core, you can compare the effects of market volatilities on First Trust and Franklin 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 First Trust with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Franklin International.
Diversification Opportunities for First Trust and Franklin International
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Franklin is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Franklin International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and First 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 First Trust Exchange Traded are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of First Trust i.e., First Trust and Franklin International go up and down completely randomly.
Pair Corralation between First Trust and Franklin International
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 1.39 times more return on investment than Franklin International. However, First Trust is 1.39 times more volatile than Franklin International Core. It trades about 0.29 of its potential returns per unit of risk. Franklin International Core is currently generating about 0.22 per unit of risk. If you would invest 6,684 in First Trust Exchange Traded on October 21, 2024 and sell it today you would earn a total of 299.00 from holding First Trust Exchange Traded or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Franklin International Core
Performance |
| Timeline |
| First Trust Exchange |
| Franklin International |
First Trust and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Franklin International
The main advantage of trading using opposite First Trust and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Franklin 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 Franklin International will offset losses from the drop in Franklin International's long position.| First Trust vs. Franklin Core Dividend | First Trust vs. WisdomTree Trust | First Trust vs. Invesco SP MidCap |
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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