Correlation Between ETRACS 2x and Franklin Templeton

Can any of the company-specific risk be diversified away by investing in both ETRACS 2x 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 ETRACS 2x and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for ETRACS 2x and Franklin Templeton

-0.02

Correlation Coefficient

ETRACS 2x  Franklin Templeton

Good diversification

The 3 months correlation between ETRACS and Franklin is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2x Leveraged 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 ETRACS 2x 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 ETRACS 2x Leveraged 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 ETRACS 2x i.e., ETRACS 2x and Franklin Templeton go up and down completely randomly.

Pair Corralation between ETRACS 2x and Franklin Templeton

Given the investment horizon of 90 days ETRACS 2x Leveraged is expected to generate 1.02 times more return on investment than Franklin Templeton. However, ETRACS 2x is 1.02 times more volatile than Franklin Templeton ETF. It trades about 0.07 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about 0.06 per unit of risk. If you would invest  3,973  in ETRACS 2x Leveraged on September 13, 2024 and sell it today you would earn a total of  204.00  from holding ETRACS 2x Leveraged or generate 5.13% return on investment over 90 days.

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

ETRACS 2x Leveraged  vs.  Franklin Templeton ETF

ETRACS 2x Leveraged

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS 2x Leveraged are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, ETRACS 2x is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Franklin Templeton ETF

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ETRACS 2x and Franklin Templeton

The main advantage of trading using opposite ETRACS 2x and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2x 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 ETRACS 2x Leveraged 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.