Correlation Between T Rex and Franklin Templeton

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

By analyzing existing cross correlation between T Rex 2X Long and Franklin Templeton ETF, you can compare the effects of market volatilities on T Rex and Franklin Templeton 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 T Rex with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and Franklin Templeton.

Diversification Opportunities for T Rex and Franklin Templeton

-0.87

Correlation Coefficient

T Rex  Franklin Templeton

Pay attention - limited upside

The 3 months correlation between NVDX and Franklin is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF and T Rex 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 T Rex 2X Long are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton ETF has no effect on the direction of T Rex i.e., T Rex and Franklin Templeton go up and down completely randomly.

Pair Corralation between T Rex and Franklin Templeton

Given the investment horizon of 90 days T Rex 2X Long is expected to generate 16.36 times more return on investment than Franklin Templeton. However, T Rex is 16.36 times more volatile than Franklin Templeton ETF. It trades about 0.16 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about -0.03 per unit of risk. If you would invest  1,147  in T Rex 2X Long on September 1, 2024 and sell it today you would earn a total of  595.00  from holding T Rex 2X Long or generate 51.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

T Rex 2X Long  vs.  Franklin Templeton ETF

T Rex 2X

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Rex 2X Long are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, T Rex showed solid returns over the last few months and may actually be approaching a breakup point.

Franklin Templeton ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Templeton ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with T Rex and Franklin Templeton

The main advantage of trading using opposite T Rex and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.

The idea behind T Rex 2X Long and Franklin Templeton ETF 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.