Correlation Between Franklin Templeton and JP Morgan

Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and JP Morgan 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 JP Morgan 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 JP Morgan Exchange Traded, you can compare the effects of market volatilities on Franklin Templeton and JP Morgan 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 JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and JP Morgan.

Diversification Opportunities for Franklin Templeton and JP Morgan

0.98

Correlation Coefficient

Franklin Templeton  JP Morgan

Almost no diversification

The 3 months correlation between Franklin and JADE is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange 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 JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and JP Morgan go up and down completely randomly.

Pair Corralation between Franklin Templeton and JP Morgan

Given the investment horizon of 90 days Franklin Templeton is expected to generate 1.46 times less return on investment than JP Morgan. But when comparing it to its historical volatility, Franklin Templeton ETF is 1.21 times less risky than JP Morgan. It trades about 0.08 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,653  in JP Morgan Exchange Traded on December 28, 2024 and sell it today you would earn a total of  278.00  from holding JP Morgan Exchange Traded or generate 5.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Franklin Templeton ETF  vs.  JP Morgan Exchange Traded

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 6 (%) 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.

JP Morgan Exchange

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, JP Morgan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Franklin Templeton and JP Morgan

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

The idea behind Franklin Templeton ETF and JP Morgan Exchange Traded 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.