Correlation Between Franklin Templeton and Direxion Daily

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

Diversification Opportunities for Franklin Templeton and Direxion Daily

-0.46

Correlation Coefficient

Franklin Templeton  Direxion Daily

Very good diversification

The 3 months correlation between Franklin and Direxion is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Direxion Daily NVDA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily NVDA 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 Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily NVDA has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Direxion Daily go up and down completely randomly.

Pair Corralation between Franklin Templeton and Direxion Daily

Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 0.11 times more return on investment than Direxion Daily. However, Franklin Templeton ETF is 9.15 times less risky than Direxion Daily. It trades about 0.04 of its potential returns per unit of risk. Direxion Daily NVDA is currently generating about -0.07 per unit of risk. If you would invest  2,658  in Franklin Templeton ETF on December 30, 2024 and sell it today you would earn a total of  57.00  from holding Franklin Templeton ETF or generate 2.14% return on investment over 90 days.

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

Franklin Templeton ETF  vs.  Direxion Daily NVDA

Franklin Templeton ETF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 3 (%) 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.

Direxion Daily NVDA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily NVDA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Franklin Templeton and Direxion Daily

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

The idea behind Franklin Templeton ETF and Direxion Daily NVDA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.