Correlation Between Franklin FTSE and RTW Venture

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

Diversification Opportunities for Franklin FTSE and RTW Venture

0.81

Correlation Coefficient

Franklin FTSE  RTW Venture

Very poor diversification

The 3 months correlation between Franklin and RTW is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Brazil and RTW Venture Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTW Venture Fund 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 RTW Venture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTW Venture Fund has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and RTW Venture go up and down completely randomly.

Pair Corralation between Franklin FTSE and RTW Venture

Assuming the 90 days trading horizon Franklin FTSE Brazil is expected to generate 0.78 times more return on investment than RTW Venture. However, Franklin FTSE Brazil is 1.28 times less risky than RTW Venture. It trades about 0.28 of its potential returns per unit of risk. RTW Venture Fund is currently generating about 0.03 per unit of risk. If you would invest  1,664  in Franklin FTSE Brazil on October 20, 2024 and sell it today you would earn a total of  90.00  from holding Franklin FTSE Brazil or generate 5.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Franklin FTSE Brazil  vs.  RTW Venture Fund

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. In spite of comparatively stable basic indicators, Franklin FTSE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

RTW Venture Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTW Venture Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Franklin FTSE and RTW Venture

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

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