Correlation Between VanEck ChiNext and Franklin FTSE

Can any of the company-specific risk be diversified away by investing in both VanEck ChiNext 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 ChiNext 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 ChiNext ETF and Franklin FTSE South, you can compare the effects of market volatilities on VanEck ChiNext 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 ChiNext with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck ChiNext and Franklin FTSE.

Diversification Opportunities for VanEck ChiNext and Franklin FTSE

-0.4

Correlation Coefficient

VanEck ChiNext  Franklin FTSE

Very good diversification

The 3 months correlation between VanEck and Franklin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding VanEck ChiNext ETF and Franklin FTSE South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE South and VanEck ChiNext 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 ChiNext 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 South has no effect on the direction of VanEck ChiNext i.e., VanEck ChiNext and Franklin FTSE go up and down completely randomly.

Pair Corralation between VanEck ChiNext and Franklin FTSE

Given the investment horizon of 90 days VanEck ChiNext ETF is expected to generate 4.0 times more return on investment than Franklin FTSE. However, VanEck ChiNext is 4.0 times more volatile than Franklin FTSE South. It trades about 0.12 of its potential returns per unit of risk. Franklin FTSE South is currently generating about -0.09 per unit of risk. If you would invest  2,055  in VanEck ChiNext ETF on September 5, 2024 and sell it today you would earn a total of  870.00  from holding VanEck ChiNext ETF or generate 42.34% return on investment over 90 days.

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

VanEck ChiNext ETF  vs.  Franklin FTSE South

VanEck ChiNext ETF

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck ChiNext ETF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, VanEck ChiNext unveiled solid returns over the last few months and may actually be approaching a breakup point.

Franklin FTSE South

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin FTSE South has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with VanEck ChiNext and Franklin FTSE

The main advantage of trading using opposite VanEck ChiNext and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck ChiNext 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 ChiNext ETF and Franklin FTSE South 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.