Correlation Between Franklin FTSE and FLIY

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

Diversification Opportunities for Franklin FTSE and FLIY

-0.61

Correlation Coefficient

Franklin FTSE  FLIY

Excellent diversification

The 3 months correlation between Franklin and FLIY is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Brazil and FLIY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLIY 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 FLIY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLIY has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and FLIY go up and down completely randomly.

Pair Corralation between Franklin FTSE and FLIY

Given the investment horizon of 90 days Franklin FTSE Brazil is expected to under-perform the FLIY. In addition to that, Franklin FTSE is 1.35 times more volatile than FLIY. It trades about -0.02 of its total potential returns per unit of risk. FLIY is currently generating about 0.23 per unit of volatility. If you would invest  2,640  in FLIY on October 22, 2024 and sell it today you would earn a total of  106.00  from holding FLIY or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.35%
Values	Daily Returns

Franklin FTSE Brazil  vs.  FLIY

Franklin FTSE Brazil

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Etf's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

FLIY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLIY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, FLIY is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin FTSE and FLIY

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

The idea behind Franklin FTSE Brazil and FLIY 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.