Correlation Between Franklin Templeton and ClearShares Piton

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

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

Diversification Opportunities for Franklin Templeton and ClearShares Piton

0.99

Correlation Coefficient

Franklin Templeton  ClearShares Piton

No risk reduction

The 3 months correlation between Franklin and ClearShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and ClearShares Piton Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearShares Piton and Franklin Templeton 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 Templeton ETF are associated (or correlated) with ClearShares Piton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearShares Piton has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and ClearShares Piton go up and down completely randomly.

Pair Corralation between Franklin Templeton and ClearShares Piton

Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 1.95 times more return on investment than ClearShares Piton. However, Franklin Templeton is 1.95 times more volatile than ClearShares Piton Intermediate. It trades about 0.15 of its potential returns per unit of risk. ClearShares Piton Intermediate is currently generating about 0.22 per unit of risk. If you would invest  2,086  in Franklin Templeton ETF on December 22, 2024 and sell it today you would earn a total of  61.00  from holding Franklin Templeton ETF or generate 2.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Franklin Templeton ETF  vs.  ClearShares Piton Intermediate

Franklin Templeton ETF

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ClearShares Piton

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ClearShares Piton Intermediate are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, ClearShares Piton is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Franklin Templeton and ClearShares Piton

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

The idea behind Franklin Templeton ETF and ClearShares Piton Intermediate 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.