Correlation Between Vanguard Value and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both Vanguard Value 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 Value 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 Value Index and Franklin FTSE United, you can compare the effects of market volatilities on Vanguard Value 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 Value with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Franklin FTSE.
Diversification Opportunities for Vanguard Value and Franklin FTSE
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Franklin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value 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 Value 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 Value 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 Value i.e., Vanguard Value and Franklin FTSE go up and down completely randomly.
Pair Corralation between Vanguard Value and Franklin FTSE
Considering the 90-day investment horizon Vanguard Value is expected to generate 14.27 times less return on investment than Franklin FTSE. But when comparing it to its historical volatility, Vanguard Value Index is 1.07 times less risky than Franklin FTSE. It trades about 0.02 of its potential returns per unit of risk. Franklin FTSE United is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,764 in Franklin FTSE United on December 1, 2024 and sell it today you would earn a total of 94.00 from holding Franklin FTSE United or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Value Index vs. Franklin FTSE United
Performance |
| Timeline |
| Vanguard Value Index |
| Franklin FTSE United |
Vanguard Value and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and Franklin FTSE
The main advantage of trading using opposite Vanguard Value and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value 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 Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
| Franklin FTSE vs. Franklin FTSE Japan | Franklin FTSE vs. Franklin FTSE Germany | Franklin FTSE vs. Franklin FTSE Australia | Franklin FTSE vs. Franklin FTSE Canada |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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