Correlation Between Vanguard FTSE and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE 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 Vanguard FTSE and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Europe and Franklin FTSE Europe, you can compare the effects of market volatilities on Vanguard FTSE 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 Vanguard FTSE with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Franklin FTSE.
Diversification Opportunities for Vanguard FTSE and Franklin FTSE
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Franklin is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Europe and Franklin FTSE Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Europe and Vanguard FTSE 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 Vanguard FTSE Europe 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 Europe has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Franklin FTSE go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Franklin FTSE
Considering the 90-day investment horizon Vanguard FTSE Europe is expected to under-perform the Franklin FTSE. In addition to that, Vanguard FTSE is 1.02 times more volatile than Franklin FTSE Europe. It trades about -0.3 of its total potential returns per unit of risk. Franklin FTSE Europe is currently generating about -0.31 per unit of volatility. If you would invest 3,002 in Franklin FTSE Europe on August 29, 2024 and sell it today you would lose (171.00) from holding Franklin FTSE Europe or give up 5.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Europe vs. Franklin FTSE Europe
Performance |
| Timeline |
| Vanguard FTSE Europe |
| Franklin FTSE Europe |
Vanguard FTSE and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Franklin FTSE
The main advantage of trading using opposite Vanguard FTSE and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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.| Vanguard FTSE vs. Vanguard FTSE Pacific | Vanguard FTSE vs. Vanguard FTSE Emerging | Vanguard FTSE vs. Vanguard FTSE All World | Vanguard FTSE vs. Vanguard FTSE Developed |
| Franklin FTSE vs. Franklin FTSE United | Franklin FTSE vs. SPDR Portfolio Europe | Franklin FTSE vs. Franklin FTSE Germany | Franklin FTSE vs. Franklin FTSE Japan |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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