Correlation Between Global Opportunities and Franklin FTSE

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

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

Diversification Opportunities for Global Opportunities and Franklin FTSE

0.45

Correlation Coefficient

Global Opportunities  Franklin FTSE

Very weak diversification

The 3 months correlation between Global and Franklin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Global Opportunities Trust 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 Global Opportunities 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 Global Opportunities Trust 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 Global Opportunities i.e., Global Opportunities and Franklin FTSE go up and down completely randomly.

Pair Corralation between Global Opportunities and Franklin FTSE

Assuming the 90 days trading horizon Global Opportunities Trust is expected to under-perform the Franklin FTSE. But the stock apears to be less risky and, when comparing its historical volatility, Global Opportunities Trust is 1.03 times less risky than Franklin FTSE. The stock trades about -0.01 of its potential returns per unit of risk. The Franklin FTSE Brazil is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,856  in Franklin FTSE Brazil on October 3, 2024 and sell it today you would lose (214.00) from holding Franklin FTSE Brazil or give up 11.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Global Opportunities Trust  vs.  Franklin FTSE Brazil

Global Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Opportunities Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Global Opportunities is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Global Opportunities and Franklin FTSE

The main advantage of trading using opposite Global Opportunities and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Opportunities 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 Global Opportunities Trust 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.