Correlation Between Franklin FTSE and CHIM

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

Diversification Opportunities for Franklin FTSE and CHIM

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Franklin and CHIM is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Brazil and CHIM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIM 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 CHIM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIM has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and CHIM go up and down completely randomly.

Pair Corralation between Franklin FTSE and CHIM

If you would invest  1,644  in CHIM on September 5, 2024 and sell it today you would earn a total of  0.00  from holding CHIM or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy1.56%
ValuesDaily Returns

Franklin FTSE Brazil  vs.  CHIM

 Performance 
       Timeline  
Franklin FTSE Brazil 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Franklin FTSE Brazil has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Etf's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.
CHIM 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CHIM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, CHIM is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Franklin FTSE and CHIM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin FTSE and CHIM

The main advantage of trading using opposite Franklin FTSE and CHIM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, CHIM 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 CHIM will offset losses from the drop in CHIM's long position.
The idea behind Franklin FTSE Brazil and CHIM 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.
Check out your portfolio center.
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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