Correlation Between Franklin Genomic and Invesco DWA

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

By analyzing existing cross correlation between Franklin Genomic Advancements and Invesco DWA Industrials, you can compare the effects of market volatilities on Franklin Genomic and Invesco DWA 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 Genomic with a short position of Invesco DWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Genomic and Invesco DWA.

Diversification Opportunities for Franklin Genomic and Invesco DWA

-0.08

Correlation Coefficient

Franklin Genomic  Invesco DWA

Good diversification

The 3 months correlation between Franklin and Invesco is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Genomic Advancements and Invesco DWA Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Industrials and Franklin Genomic 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 Genomic Advancements are associated (or correlated) with Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Industrials has no effect on the direction of Franklin Genomic i.e., Franklin Genomic and Invesco DWA go up and down completely randomly.

Pair Corralation between Franklin Genomic and Invesco DWA

Given the investment horizon of 90 days Franklin Genomic Advancements is expected to under-perform the Invesco DWA. But the etf apears to be less risky and, when comparing its historical volatility, Franklin Genomic Advancements is 1.16 times less risky than Invesco DWA. The etf trades about -0.09 of its potential returns per unit of risk. The Invesco DWA Industrials is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  15,474  in Invesco DWA Industrials on October 8, 2024 and sell it today you would earn a total of  382.00  from holding Invesco DWA Industrials or generate 2.47% return on investment over 90 days.

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

Franklin Genomic Advancements  vs.  Invesco DWA Industrials

Franklin Genomic Adv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Genomic Advancements has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Invesco DWA Industrials

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DWA Industrials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Invesco DWA is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Franklin Genomic and Invesco DWA

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

The idea behind Franklin Genomic Advancements and Invesco DWA Industrials 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.