Correlation Between Franklin FTSE and Global X

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

By analyzing existing cross correlation between Franklin FTSE Brazil and Global X Funds, you can compare the effects of market volatilities on Franklin FTSE and Global X 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 FTSE with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and Global X.

Diversification Opportunities for Franklin FTSE and Global X

0.93

Correlation Coefficient

Franklin FTSE  Global X

Almost no diversification

The 3 months correlation between Franklin and Global is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Brazil and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and Franklin FTSE 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 FTSE Brazil are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and Global X go up and down completely randomly.

Pair Corralation between Franklin FTSE and Global X

Given the investment horizon of 90 days Franklin FTSE Brazil is expected to generate 0.99 times more return on investment than Global X. However, Franklin FTSE Brazil is 1.01 times less risky than Global X. It trades about 0.19 of its potential returns per unit of risk. Global X Funds is currently generating about 0.13 per unit of risk. If you would invest  1,417  in Franklin FTSE Brazil on December 29, 2024 and sell it today you would earn a total of  242.00  from holding Franklin FTSE Brazil or generate 17.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Franklin FTSE Brazil  vs.  Global X Funds

Franklin FTSE Brazil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin FTSE Brazil are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Franklin FTSE reported solid returns over the last few months and may actually be approaching a breakup point.

Global X Funds

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Franklin FTSE and Global X

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

The idea behind Franklin FTSE Brazil and Global X Funds 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.