Correlation Between ETF Series and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both ETF Series 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 ETF Series and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and Franklin Templeton ETF, you can compare the effects of market volatilities on ETF Series 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 ETF Series with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and Franklin Templeton.
Diversification Opportunities for ETF Series and Franklin Templeton
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ETF and Franklin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions 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 ETF Series 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 ETF Series Solutions 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 ETF Series i.e., ETF Series and Franklin Templeton go up and down completely randomly.
Pair Corralation between ETF Series and Franklin Templeton
Given the investment horizon of 90 days ETF Series Solutions is expected to generate 0.11 times more return on investment than Franklin Templeton. However, ETF Series Solutions is 9.17 times less risky than Franklin Templeton. It trades about 0.31 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about -0.15 per unit of risk. If you would invest 2,523 in ETF Series Solutions on August 27, 2024 and sell it today you would earn a total of 19.00 from holding ETF Series Solutions or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETF Series Solutions vs. Franklin Templeton ETF
Performance |
| Timeline |
| ETF Series Solutions |
| Franklin Templeton ETF |
ETF Series and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and Franklin Templeton
The main advantage of trading using opposite ETF Series and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series 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.| ETF Series vs. Capital Group Short | ETF Series vs. Capital Group Municipal | ETF Series vs. Capital Group Global | ETF Series vs. Capital Group Dividend |
| Franklin Templeton vs. Invesco PureBeta MSCI | Franklin Templeton vs. Aquagold International | Franklin Templeton vs. Morningstar Unconstrained Allocation | Franklin Templeton vs. High Yield Municipal Fund |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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