Correlation Between Vanguard Mid and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid 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 Mid 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 Mid Cap Index and Franklin FTSE United, you can compare the effects of market volatilities on Vanguard Mid 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 Mid with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and Franklin FTSE.
Diversification Opportunities for Vanguard Mid and Franklin FTSE
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Franklin is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Franklin FTSE United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE United and Vanguard Mid 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 Mid Cap Index 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 United has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Franklin FTSE go up and down completely randomly.
Pair Corralation between Vanguard Mid and Franklin FTSE
Allowing for the 90-day total investment horizon Vanguard Mid Cap Index is expected to generate 0.98 times more return on investment than Franklin FTSE. However, Vanguard Mid Cap Index is 1.02 times less risky than Franklin FTSE. It trades about 0.17 of its potential returns per unit of risk. Franklin FTSE United is currently generating about 0.01 per unit of risk. If you would invest 24,190 in Vanguard Mid Cap Index on August 29, 2024 and sell it today you would earn a total of 4,213 from holding Vanguard Mid Cap Index or generate 17.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Franklin FTSE United
Performance |
| Timeline |
| Vanguard Mid Cap |
| Franklin FTSE United |
Vanguard Mid and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and Franklin FTSE
The main advantage of trading using opposite Vanguard Mid and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid 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 Mid vs. Vanguard Small Cap Index | Vanguard Mid vs. Vanguard Large Cap Index | Vanguard Mid vs. Vanguard Small Cap Growth | Vanguard Mid vs. Vanguard Small Cap Value |
| Franklin FTSE vs. iShares MSCI Hong | Franklin FTSE vs. HUMANA INC | Franklin FTSE vs. SCOR PK | Franklin FTSE vs. Aquagold International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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