Correlation Between Six Circles and Franklin FTSE

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

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

Diversification Opportunities for Six Circles and Franklin FTSE

0.06

Correlation Coefficient

Six Circles  Franklin FTSE

Significant diversification

The 3 months correlation between Six and Franklin is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Six Circles Unconstrained and Franklin FTSE Germany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Germany and Six Circles 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 Six Circles Unconstrained 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 Germany has no effect on the direction of Six Circles i.e., Six Circles and Franklin FTSE go up and down completely randomly.

Pair Corralation between Six Circles and Franklin FTSE

Assuming the 90 days horizon Six Circles Unconstrained is expected to under-perform the Franklin FTSE. In addition to that, Six Circles is 1.19 times more volatile than Franklin FTSE Germany. It trades about -0.06 of its total potential returns per unit of risk. Franklin FTSE Germany is currently generating about 0.22 per unit of volatility. If you would invest  2,488  in Franklin FTSE Germany on October 26, 2024 and sell it today you would earn a total of  219.00  from holding Franklin FTSE Germany or generate 8.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Six Circles Unconstrained  vs.  Franklin FTSE Germany

Six Circles Unconstrained

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Six Circles Unconstrained has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Six Circles is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin FTSE Germany

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin FTSE Germany are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Franklin FTSE is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Six Circles and Franklin FTSE

The main advantage of trading using opposite Six Circles and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Six Circles 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 Six Circles Unconstrained and Franklin FTSE Germany 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.