Correlation Between Franklin Templeton and DBX ETF

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

Diversification Opportunities for Franklin Templeton and DBX ETF

0.59

Correlation Coefficient

Franklin Templeton  DBX ETF

Very weak diversification

The 3 months correlation between Franklin and DBX is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and DBX ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBX ETF Trust 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 DBX ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBX ETF Trust has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and DBX ETF go up and down completely randomly.

Pair Corralation between Franklin Templeton and DBX ETF

Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 1.03 times more return on investment than DBX ETF. However, Franklin Templeton is 1.03 times more volatile than DBX ETF Trust. It trades about 0.07 of its potential returns per unit of risk. DBX ETF Trust is currently generating about 0.02 per unit of risk. If you would invest  2,675  in Franklin Templeton ETF on December 27, 2024 and sell it today you would earn a total of  91.00  from holding Franklin Templeton ETF or generate 3.4% 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.  DBX ETF Trust

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.

DBX ETF Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DBX ETF Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, DBX ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Franklin Templeton and DBX ETF

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

The idea behind Franklin Templeton ETF and DBX ETF Trust 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.