Correlation Between FLEH and Franklin FTSE

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

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

Diversification Opportunities for FLEH and Franklin FTSE

0.22

Correlation Coefficient

FLEH  Franklin FTSE

Modest diversification

The 3 months correlation between FLEH and Franklin is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding FLEH and Franklin FTSE Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Japan and FLEH 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 FLEH are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Japan has no effect on the direction of FLEH i.e., FLEH and Franklin FTSE go up and down completely randomly.

Pair Corralation between FLEH and Franklin FTSE

If you would invest  2,999  in Franklin FTSE Japan on September 5, 2024 and sell it today you would earn a total of  31.00  from holding Franklin FTSE Japan or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

FLEH  vs.  Franklin FTSE Japan

FLEH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLEH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, FLEH is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Franklin FTSE Japan

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin FTSE Japan are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking indicators, Franklin FTSE is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FLEH and Franklin FTSE

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

The idea behind FLEH and Franklin FTSE Japan 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.