Correlation Between Franklin Templeton and Franklin Exponential

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

By analyzing existing cross correlation between Franklin Templeton ETF and Franklin Exponential Data, you can compare the effects of market volatilities on Franklin Templeton and Franklin Exponential 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 Templeton with a short position of Franklin Exponential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and Franklin Exponential.

Diversification Opportunities for Franklin Templeton and Franklin Exponential

0.49

Correlation Coefficient

Franklin Templeton  Franklin Exponential

Very weak diversification

The 3 months correlation between Franklin and Franklin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Franklin Exponential Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Exponential Data and Franklin Templeton 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 Templeton ETF are associated (or correlated) with Franklin Exponential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Exponential Data has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Franklin Exponential go up and down completely randomly.

Pair Corralation between Franklin Templeton and Franklin Exponential

Considering the 90-day investment horizon Franklin Templeton ETF is expected to under-perform the Franklin Exponential. In addition to that, Franklin Templeton is 1.36 times more volatile than Franklin Exponential Data. It trades about -0.3 of its total potential returns per unit of risk. Franklin Exponential Data is currently generating about -0.24 per unit of volatility. If you would invest  2,662  in Franklin Exponential Data on December 3, 2024 and sell it today you would lose (180.00) from holding Franklin Exponential Data or give up 6.76% of portfolio value over 90 days.

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

Franklin Templeton ETF  vs.  Franklin Exponential Data

Franklin Templeton ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Templeton ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Franklin Exponential Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Exponential Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Franklin Exponential is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Franklin Templeton and Franklin Exponential

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

The idea behind Franklin Templeton ETF and Franklin Exponential Data 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.