Correlation Between Franklin FTSE and UBS Plc
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and UBS 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 UBS 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 UBS plc , you can compare the effects of market volatilities on Franklin FTSE and UBS 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 UBS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and UBS Plc.
Diversification Opportunities for Franklin FTSE and UBS Plc
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Franklin and UBS is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Brazil and UBS plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS 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 UBS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS plc has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and UBS Plc go up and down completely randomly.
Pair Corralation between Franklin FTSE and UBS Plc
Assuming the 90 days trading horizon Franklin FTSE Brazil is expected to under-perform the UBS Plc. In addition to that, Franklin FTSE is 1.88 times more volatile than UBS plc . It trades about -0.11 of its total potential returns per unit of risk. UBS plc is currently generating about 0.19 per unit of volatility. If you would invest 845,900 in UBS plc on September 10, 2024 and sell it today you would earn a total of 74,500 from holding UBS plc or generate 8.81% 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. UBS plc
Performance |
Timeline |
Franklin FTSE Brazil |
UBS plc |
Franklin FTSE and UBS Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin FTSE and UBS Plc
The main advantage of trading using opposite Franklin FTSE and UBS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, UBS 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 UBS Plc will offset losses from the drop in UBS Plc's long position.Franklin FTSE vs. Franklin LibertyQ Global | Franklin FTSE vs. Franklin Libertyshares ICAV | Franklin FTSE vs. Franklin FTSE Asia | Franklin FTSE vs. Franklin FTSE Brazil |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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