Correlation Between Franklin Templeton and Tidal Trust

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

Diversification Opportunities for Franklin Templeton and Tidal Trust

0.81

Correlation Coefficient

Franklin Templeton  Tidal Trust

Very poor diversification

The 3 months correlation between Franklin and Tidal is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Tidal Trust go up and down completely randomly.

Pair Corralation between Franklin Templeton and Tidal Trust

Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 0.3 times more return on investment than Tidal Trust. However, Franklin Templeton ETF is 3.31 times less risky than Tidal Trust. It trades about 0.04 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.08 per unit of risk. If you would invest  2,232  in Franklin Templeton ETF on October 22, 2024 and sell it today you would earn a total of  425.00  from holding Franklin Templeton ETF or generate 19.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	62.9%
Values	Daily Returns

Franklin Templeton ETF  vs.  Tidal Trust II

Franklin Templeton ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Templeton ETF has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Tidal Trust II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Etf's basic 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 Franklin Templeton and Tidal Trust

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

The idea behind Franklin Templeton ETF and Tidal Trust II 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 Anywhere module to track or share privately all of your investments from the convenience of any device.