Correlation Between Vanguard FTSE and Franklin FTSE

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

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

Diversification Opportunities for Vanguard FTSE and Franklin FTSE

0.65

Correlation Coefficient

Vanguard FTSE  Franklin FTSE

Poor diversification

The 3 months correlation between Vanguard and Franklin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed 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 Vanguard FTSE 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 Vanguard FTSE Developed 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 Vanguard FTSE i.e., Vanguard FTSE and Franklin FTSE go up and down completely randomly.

Pair Corralation between Vanguard FTSE and Franklin FTSE

Assuming the 90 days trading horizon Vanguard FTSE Developed is expected to generate 0.62 times more return on investment than Franklin FTSE. However, Vanguard FTSE Developed is 1.62 times less risky than Franklin FTSE. It trades about -0.34 of its potential returns per unit of risk. Franklin FTSE Brazil is currently generating about -0.31 per unit of risk. If you would invest  4,864  in Vanguard FTSE Developed on October 6, 2024 and sell it today you would lose (231.00) from holding Vanguard FTSE Developed or give up 4.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Vanguard FTSE Developed  vs.  Franklin FTSE Brazil

Vanguard FTSE Developed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE Developed 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.

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 uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Vanguard FTSE and Franklin FTSE

The main advantage of trading using opposite Vanguard FTSE and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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 Vanguard FTSE Developed 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.