Correlation Between Franklin FTSE and JPMorgan BetaBuilders

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

By analyzing existing cross correlation between Franklin FTSE Germany and JPMorgan BetaBuilders Developed, you can compare the effects of market volatilities on Franklin FTSE and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and JPMorgan BetaBuilders.

Diversification Opportunities for Franklin FTSE and JPMorgan BetaBuilders

0.44

Correlation Coefficient

Franklin FTSE  JPMorgan BetaBuilders

Very weak diversification

The 3 months correlation between Franklin and JPMorgan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Germany and JPMorgan BetaBuilders Develope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders 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 Germany are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and JPMorgan BetaBuilders go up and down completely randomly.

Pair Corralation between Franklin FTSE and JPMorgan BetaBuilders

Given the investment horizon of 90 days Franklin FTSE Germany is expected to generate 1.49 times more return on investment than JPMorgan BetaBuilders. However, Franklin FTSE is 1.49 times more volatile than JPMorgan BetaBuilders Developed. It trades about 0.25 of its potential returns per unit of risk. JPMorgan BetaBuilders Developed is currently generating about 0.02 per unit of risk. If you would invest  2,510  in Franklin FTSE Germany on December 21, 2024 and sell it today you would earn a total of  517.00  from holding Franklin FTSE Germany or generate 20.6% return on investment over 90 days.

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

Franklin FTSE Germany  vs.  JPMorgan BetaBuilders Develope

Franklin FTSE Germany

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin FTSE Germany are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Franklin FTSE reported solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan BetaBuilders

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Developed are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, JPMorgan BetaBuilders 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 JPMorgan BetaBuilders

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

The idea behind Franklin FTSE Germany and JPMorgan BetaBuilders Developed 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.