Correlation Between UBS ETRACS and Franklin FTSE

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

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

Diversification Opportunities for UBS ETRACS and Franklin FTSE

-0.48

Correlation Coefficient

UBS ETRACS  Franklin FTSE

Very good diversification

The 3 months correlation between UBS and Franklin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Franklin FTSE Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Canada and UBS ETRACS 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 UBS ETRACS 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 Canada has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Franklin FTSE go up and down completely randomly.

Pair Corralation between UBS ETRACS and Franklin FTSE

Given the investment horizon of 90 days UBS ETRACS is expected to under-perform the Franklin FTSE. In addition to that, UBS ETRACS is 7.39 times more volatile than Franklin FTSE Canada. It trades about -0.05 of its total potential returns per unit of risk. Franklin FTSE Canada is currently generating about 0.05 per unit of volatility. If you would invest  3,602  in Franklin FTSE Canada on December 19, 2024 and sell it today you would earn a total of  86.00  from holding Franklin FTSE Canada or generate 2.39% return on investment over 90 days.

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

UBS ETRACS   vs.  Franklin FTSE Canada

UBS ETRACS

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS ETRACS 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 forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Franklin FTSE Canada

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin FTSE Canada are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Franklin FTSE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UBS ETRACS and Franklin FTSE

The main advantage of trading using opposite UBS ETRACS and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS 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 UBS ETRACS and Franklin FTSE Canada 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.