Correlation Between Ftfa Franklin and Us Government

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

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

Diversification Opportunities for Ftfa Franklin and Us Government

-0.08

Correlation Coefficient

Ftfa Franklin  Us Government

Good diversification

The 3 months correlation between Ftfa and GVPIX is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ftfa Franklin Templeton Growth and Us Government Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Plus and Ftfa Franklin 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 Ftfa Franklin Templeton Growth are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Plus has no effect on the direction of Ftfa Franklin i.e., Ftfa Franklin and Us Government go up and down completely randomly.

Pair Corralation between Ftfa Franklin and Us Government

Assuming the 90 days horizon Ftfa Franklin Templeton Growth is expected to generate 0.74 times more return on investment than Us Government. However, Ftfa Franklin Templeton Growth is 1.34 times less risky than Us Government. It trades about -0.04 of its potential returns per unit of risk. Us Government Plus is currently generating about -0.37 per unit of risk. If you would invest  2,109  in Ftfa Franklin Templeton Growth on September 28, 2024 and sell it today you would lose (13.00) from holding Ftfa Franklin Templeton Growth or give up 0.62% of portfolio value over 90 days.

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

Ftfa Franklin Templeton Growth  vs.  Us Government Plus

Ftfa Franklin Templeton

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ftfa Franklin Templeton Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ftfa Franklin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Us Government Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Us Government Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Ftfa Franklin and Us Government

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

The idea behind Ftfa Franklin Templeton Growth and Us Government Plus 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.