Correlation Between Franklin Disruptive and Franklin Exponential

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

By analyzing existing cross correlation between Franklin Disruptive Commerce and Franklin Exponential Data, you can compare the effects of market volatilities on Franklin Disruptive and Franklin Exponential 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 Franklin Disruptive with a short position of Franklin Exponential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Disruptive and Franklin Exponential.

Diversification Opportunities for Franklin Disruptive and Franklin Exponential

0.95

Correlation Coefficient

Franklin Disruptive  Franklin Exponential

Almost no diversification

The 3 months correlation between Franklin and Franklin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Disruptive Commerce and Franklin Exponential Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Exponential Data and Franklin Disruptive 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 Franklin Disruptive Commerce are associated (or correlated) with Franklin Exponential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Exponential Data has no effect on the direction of Franklin Disruptive i.e., Franklin Disruptive and Franklin Exponential go up and down completely randomly.

Pair Corralation between Franklin Disruptive and Franklin Exponential

Given the investment horizon of 90 days Franklin Disruptive Commerce is expected to generate 0.92 times more return on investment than Franklin Exponential. However, Franklin Disruptive Commerce is 1.08 times less risky than Franklin Exponential. It trades about -0.07 of its potential returns per unit of risk. Franklin Exponential Data is currently generating about -0.09 per unit of risk. If you would invest  3,721  in Franklin Disruptive Commerce on December 29, 2024 and sell it today you would lose (274.00) from holding Franklin Disruptive Commerce or give up 7.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Franklin Disruptive Commerce  vs.  Franklin Exponential Data

Franklin Disruptive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Disruptive Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Franklin Exponential Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Exponential Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Franklin Disruptive and Franklin Exponential

The main advantage of trading using opposite Franklin Disruptive and Franklin Exponential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Disruptive position performs unexpectedly, Franklin Exponential 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 Exponential will offset losses from the drop in Franklin Exponential's long position.

The idea behind Franklin Disruptive Commerce and Franklin Exponential Data 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.