Correlation Between Franklin FTSE and Trainline Plc

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

Diversification Opportunities for Franklin FTSE and Trainline Plc

-0.74

Correlation Coefficient

Franklin FTSE  Trainline Plc

Pay attention - limited upside

The 3 months correlation between Franklin and Trainline is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Brazil and Trainline Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainline Plc 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 Trainline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainline Plc has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and Trainline Plc go up and down completely randomly.

Pair Corralation between Franklin FTSE and Trainline Plc

Assuming the 90 days trading horizon Franklin FTSE Brazil is expected to under-perform the Trainline Plc. But the etf apears to be less risky and, when comparing its historical volatility, Franklin FTSE Brazil is 1.76 times less risky than Trainline Plc. The etf trades about -0.11 of its potential returns per unit of risk. The Trainline Plc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  30,460  in Trainline Plc on September 2, 2024 and sell it today you would earn a total of  10,320  from holding Trainline Plc or generate 33.88% return on investment over 90 days.

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

Franklin FTSE Brazil  vs.  Trainline Plc

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 latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Trainline Plc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trainline Plc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Trainline Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin FTSE and Trainline Plc

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

The idea behind Franklin FTSE Brazil and Trainline Plc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..