Correlation Between Franklin Templeton and Optimize Strategy

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

Diversification Opportunities for Franklin Templeton and Optimize Strategy

-0.38

Correlation Coefficient

Franklin Templeton  Optimize Strategy

Very good diversification

The 3 months correlation between Franklin and Optimize is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Optimize Strategy Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimize Strategy Index 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 Optimize Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimize Strategy Index has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Optimize Strategy go up and down completely randomly.

Pair Corralation between Franklin Templeton and Optimize Strategy

Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 0.74 times more return on investment than Optimize Strategy. However, Franklin Templeton ETF is 1.36 times less risky than Optimize Strategy. It trades about 0.04 of its potential returns per unit of risk. Optimize Strategy Index is currently generating about -0.12 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Franklin Templeton ETF  vs.  Optimize Strategy Index

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.

Optimize Strategy Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optimize Strategy Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Franklin Templeton and Optimize Strategy

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

The idea behind Franklin Templeton ETF and Optimize Strategy Index 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.