Correlation Between Invesco Galaxy and Franklin FTSE

Can any of the company-specific risk be diversified away by investing in both Invesco Galaxy 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 Invesco Galaxy and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Invesco Galaxy Bitcoin and Franklin FTSE Mexico, you can compare the effects of market volatilities on Invesco Galaxy 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 Invesco Galaxy with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Galaxy and Franklin FTSE.

Diversification Opportunities for Invesco Galaxy and Franklin FTSE

-0.84

Correlation Coefficient

Invesco Galaxy  Franklin FTSE

Pay attention - limited upside

The 3 months correlation between Invesco and Franklin is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Galaxy Bitcoin and Franklin FTSE Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Mexico and Invesco Galaxy 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 Invesco Galaxy Bitcoin 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 Mexico has no effect on the direction of Invesco Galaxy i.e., Invesco Galaxy and Franklin FTSE go up and down completely randomly.

Pair Corralation between Invesco Galaxy and Franklin FTSE

Given the investment horizon of 90 days Invesco Galaxy Bitcoin is expected to generate 2.56 times more return on investment than Franklin FTSE. However, Invesco Galaxy is 2.56 times more volatile than Franklin FTSE Mexico. It trades about 0.1 of its potential returns per unit of risk. Franklin FTSE Mexico is currently generating about -0.01 per unit of risk. If you would invest  4,653  in Invesco Galaxy Bitcoin on October 4, 2024 and sell it today you would earn a total of  4,986  from holding Invesco Galaxy Bitcoin or generate 107.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	49.6%
Values	Daily Returns

Invesco Galaxy Bitcoin  vs.  Franklin FTSE Mexico

Invesco Galaxy Bitcoin

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Galaxy Bitcoin are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Invesco Galaxy displayed solid returns over the last few months and may actually be approaching a breakup point.

Franklin FTSE Mexico

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin FTSE Mexico has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Invesco Galaxy and Franklin FTSE

The main advantage of trading using opposite Invesco Galaxy and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Galaxy 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.

The idea behind Invesco Galaxy Bitcoin and Franklin FTSE Mexico pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.