Correlation Between Ithaca Energy and Franklin FTSE

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

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

Diversification Opportunities for Ithaca Energy and Franklin FTSE

0.48

Correlation Coefficient

Ithaca Energy  Franklin FTSE

Very weak diversification

The 3 months correlation between Ithaca and Franklin is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ithaca Energy PLC 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 Ithaca Energy 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 Ithaca Energy PLC 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 Ithaca Energy i.e., Ithaca Energy and Franklin FTSE go up and down completely randomly.

Pair Corralation between Ithaca Energy and Franklin FTSE

Assuming the 90 days trading horizon Ithaca Energy PLC is expected to under-perform the Franklin FTSE. In addition to that, Ithaca Energy is 2.72 times more volatile than Franklin FTSE Brazil. It trades about -0.08 of its total potential returns per unit of risk. Franklin FTSE Brazil is currently generating about -0.11 per unit of volatility. If you would invest  1,911  in Franklin FTSE Brazil on September 2, 2024 and sell it today you would lose (176.00) from holding Franklin FTSE Brazil or give up 9.21% of portfolio value over 90 days.

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

Ithaca Energy PLC  vs.  Franklin FTSE Brazil

Ithaca Energy PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ithaca Energy PLC 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 Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm 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 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.

Pair Trading with Ithaca Energy and Franklin FTSE

The main advantage of trading using opposite Ithaca Energy and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ithaca Energy 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 Ithaca Energy PLC 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 Stocks Directory module to find actively traded stocks across global markets.