Correlation Between VanEck Vietnam and Franklin FTSE

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

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

Diversification Opportunities for VanEck Vietnam and Franklin FTSE

0.93

Correlation Coefficient

VanEck Vietnam  Franklin FTSE

Almost no diversification

The 3 months correlation between VanEck and Franklin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vietnam ETF and Franklin FTSE India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE India and VanEck Vietnam 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 VanEck Vietnam ETF 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 India has no effect on the direction of VanEck Vietnam i.e., VanEck Vietnam and Franklin FTSE go up and down completely randomly.

Pair Corralation between VanEck Vietnam and Franklin FTSE

Considering the 90-day investment horizon VanEck Vietnam ETF is expected to under-perform the Franklin FTSE. In addition to that, VanEck Vietnam is 1.28 times more volatile than Franklin FTSE India. It trades about -0.06 of its total potential returns per unit of risk. Franklin FTSE India is currently generating about -0.07 per unit of volatility. If you would invest  4,154  in Franklin FTSE India on September 12, 2024 and sell it today you would lose (150.00) from holding Franklin FTSE India or give up 3.61% of portfolio value over 90 days.

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

VanEck Vietnam ETF  vs.  Franklin FTSE India

VanEck Vietnam ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Vietnam ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VanEck Vietnam is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Franklin FTSE India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin FTSE India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Franklin FTSE is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VanEck Vietnam and Franklin FTSE

The main advantage of trading using opposite VanEck Vietnam and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Vietnam 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 VanEck Vietnam ETF and Franklin FTSE India 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.