Correlation Between FLIY and Franklin FTSE

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

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

Diversification Opportunities for FLIY and Franklin FTSE

-0.61

Correlation Coefficient

FLIY  Franklin FTSE

Excellent diversification

The 3 months correlation between FLIY and Franklin is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding FLIY and Franklin FTSE Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Brazil and FLIY 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 FLIY 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 Brazil has no effect on the direction of FLIY i.e., FLIY and Franklin FTSE go up and down completely randomly.

Pair Corralation between FLIY and Franklin FTSE

Given the investment horizon of 90 days FLIY is expected to generate 0.74 times more return on investment than Franklin FTSE. However, FLIY is 1.35 times less risky than Franklin FTSE. It trades about 0.23 of its potential returns per unit of risk. Franklin FTSE Brazil is currently generating about -0.02 per unit of risk. 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

FLIY  vs.  Franklin FTSE Brazil

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.

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.

Pair Trading with FLIY and Franklin FTSE

The main advantage of trading using opposite FLIY and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLIY 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 FLIY and Franklin FTSE Brazil 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.