Correlation Between Madison ETFs and Franklin Templeton

Can any of the company-specific risk be diversified away by investing in both Madison ETFs and Franklin Templeton 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 Madison ETFs and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Madison ETFs Trust and Franklin Templeton ETF, you can compare the effects of market volatilities on Madison ETFs and Franklin Templeton 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 Madison ETFs with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison ETFs and Franklin Templeton.

Diversification Opportunities for Madison ETFs and Franklin Templeton

-0.11

Correlation Coefficient

Madison ETFs  Franklin Templeton

Good diversification

The 3 months correlation between Madison and Franklin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Madison ETFs Trust and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF and Madison ETFs 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 Madison ETFs Trust are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton ETF has no effect on the direction of Madison ETFs i.e., Madison ETFs and Franklin Templeton go up and down completely randomly.

Pair Corralation between Madison ETFs and Franklin Templeton

Given the investment horizon of 90 days Madison ETFs Trust is expected to under-perform the Franklin Templeton. In addition to that, Madison ETFs is 1.1 times more volatile than Franklin Templeton ETF. It trades about -0.26 of its total potential returns per unit of risk. Franklin Templeton ETF is currently generating about -0.27 per unit of volatility. If you would invest  2,763  in Franklin Templeton ETF on October 8, 2024 and sell it today you would lose (104.00) from holding Franklin Templeton ETF or give up 3.76% of portfolio value over 90 days.

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

Madison ETFs Trust  vs.  Franklin Templeton ETF

Madison ETFs Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Madison ETFs Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Madison ETFs is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with Madison ETFs and Franklin Templeton

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

The idea behind Madison ETFs Trust and Franklin Templeton ETF 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.