Correlation Between First Trust and Franklin Core
Can any of the company-specific risk be diversified away by investing in both First Trust and Franklin Core 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 Core 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 Core Dividend, you can compare the effects of market volatilities on First Trust and Franklin Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Franklin Core.
Diversification Opportunities for First Trust and Franklin Core
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Franklin is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Franklin Core Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Core Dividend 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Core Dividend has no effect on the direction of First Trust i.e., First Trust and Franklin Core go up and down completely randomly.
Pair Corralation between First Trust and Franklin Core
Given the investment horizon of 90 days First Trust is expected to generate 1.05 times less return on investment than Franklin Core. In addition to that, First Trust is 1.1 times more volatile than Franklin Core Dividend. It trades about 0.1 of its total potential returns per unit of risk. Franklin Core Dividend is currently generating about 0.11 per unit of volatility. If you would invest 2,970 in Franklin Core Dividend on August 28, 2024 and sell it today you would earn a total of 1,688 from holding Franklin Core Dividend or generate 56.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Franklin Core Dividend
Performance |
| Timeline |
| First Trust Exchange |
| Franklin Core Dividend |
First Trust and Franklin Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Franklin Core
The main advantage of trading using opposite First Trust and Franklin Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Franklin Core 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 Core will offset losses from the drop in Franklin Core's long position.| First Trust vs. Franklin Core Dividend | First Trust vs. WisdomTree Trust | First Trust vs. Invesco SP MidCap |
| Franklin Core vs. Morningstar Unconstrained Allocation | Franklin Core vs. High Yield Municipal Fund | Franklin Core vs. Via Renewables | Franklin Core vs. Knife River |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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