Correlation Between T Rex and Franklin FTSE

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

By analyzing existing cross correlation between T Rex 2X Long and Franklin FTSE Japan, you can compare the effects of market volatilities on T Rex 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 T Rex with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and Franklin FTSE.

Diversification Opportunities for T Rex and Franklin FTSE

0.14

Correlation Coefficient

T Rex  Franklin FTSE

Average diversification

The 3 months correlation between NVDX and Franklin is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and Franklin FTSE Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Japan and T Rex 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 T Rex 2X Long 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 Japan has no effect on the direction of T Rex i.e., T Rex and Franklin FTSE go up and down completely randomly.

Pair Corralation between T Rex and Franklin FTSE

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the Franklin FTSE. In addition to that, T Rex is 8.39 times more volatile than Franklin FTSE Japan. It trades about -0.05 of its total potential returns per unit of risk. Franklin FTSE Japan is currently generating about 0.04 per unit of volatility. If you would invest  3,147  in Franklin FTSE Japan on December 25, 2024 and sell it today you would earn a total of  59.00  from holding Franklin FTSE Japan or generate 1.87% return on investment over 90 days.

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

T Rex 2X Long  vs.  Franklin FTSE Japan

T Rex 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rex 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Franklin FTSE Japan

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin FTSE Japan are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking indicators, Franklin FTSE is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with T Rex and Franklin FTSE

The main advantage of trading using opposite T Rex and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex 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 T Rex 2X Long and Franklin FTSE Japan 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.