Correlation Between Franklin Templeton and SPDR SP

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

By analyzing existing cross correlation between Franklin Templeton ETF and SPDR SP Global, you can compare the effects of market volatilities on Franklin Templeton and SPDR SP 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 Templeton with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and SPDR SP.

Diversification Opportunities for Franklin Templeton and SPDR SP

0.45

Correlation Coefficient

Franklin Templeton  SPDR SP

Very weak diversification

The 3 months correlation between Franklin and SPDR is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Global and Franklin Templeton 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 Templeton ETF are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Global has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and SPDR SP go up and down completely randomly.

Pair Corralation between Franklin Templeton and SPDR SP

Given the investment horizon of 90 days Franklin Templeton is expected to generate 1.16 times less return on investment than SPDR SP. In addition to that, Franklin Templeton is 1.05 times more volatile than SPDR SP Global. It trades about 0.07 of its total potential returns per unit of risk. SPDR SP Global is currently generating about 0.08 per unit of volatility. If you would invest  5,929  in SPDR SP Global on December 27, 2024 and sell it today you would earn a total of  234.00  from holding SPDR SP Global or generate 3.95% return on investment over 90 days.

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

Franklin Templeton ETF  vs.  SPDR SP Global

Franklin Templeton ETF

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

SPDR SP Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, SPDR SP is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Franklin Templeton and SPDR SP

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

The idea behind Franklin Templeton ETF and SPDR SP Global 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.