Correlation Between Invesco DWA and Franklin Genomic

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

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

Diversification Opportunities for Invesco DWA and Franklin Genomic

0.9

Correlation Coefficient

Invesco DWA  Franklin Genomic

Almost no diversification

The 3 months correlation between Invesco and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Consumer and Franklin Genomic Advancements in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Genomic Adv and Invesco DWA 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 Invesco DWA Consumer are associated (or correlated) with Franklin Genomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Genomic Adv has no effect on the direction of Invesco DWA i.e., Invesco DWA and Franklin Genomic go up and down completely randomly.

Pair Corralation between Invesco DWA and Franklin Genomic

Considering the 90-day investment horizon Invesco DWA Consumer is expected to under-perform the Franklin Genomic. In addition to that, Invesco DWA is 1.48 times more volatile than Franklin Genomic Advancements. It trades about -0.09 of its total potential returns per unit of risk. Franklin Genomic Advancements is currently generating about -0.04 per unit of volatility. If you would invest  2,894  in Franklin Genomic Advancements on December 28, 2024 and sell it today you would lose (106.00) from holding Franklin Genomic Advancements or give up 3.66% of portfolio value over 90 days.

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

Invesco DWA Consumer  vs.  Franklin Genomic Advancements

Invesco DWA Consumer

Risk-Adjusted Performance

Very Weak

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

Franklin Genomic Adv

Risk-Adjusted Performance

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 fairly strong essential indicators, Franklin Genomic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco DWA and Franklin Genomic

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

The idea behind Invesco DWA Consumer and Franklin Genomic Advancements 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.