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

-0.73

Correlation Coefficient

Franklin FTSE  UBS Plc

Pay attention - limited upside

The 3 months correlation between Franklin and UBS is -0.73. 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 1.8 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 0.23 per unit of volatility. If you would invest  835,600  in UBS plc on September 6, 2024 and sell it today you would earn a total of  92,100  from holding UBS plc or generate 11.02% 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

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.

UBS plc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS plc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UBS Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

The idea behind Franklin FTSE Brazil and UBS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.