Correlation Between Franklin Templeton and Listed Funds

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Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and Listed Funds 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 Franklin Templeton and Listed Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Templeton ETF and Listed Funds Trust, you can compare the effects of market volatilities on Franklin Templeton and Listed Funds 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 Franklin Templeton with a short position of Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and Listed Funds.

Diversification Opportunities for Franklin Templeton and Listed Funds

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Franklin and Listed is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust and Franklin Templeton 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 Franklin Templeton ETF are associated (or correlated) with Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Listed Funds go up and down completely randomly.

Pair Corralation between Franklin Templeton and Listed Funds

Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 1.34 times more return on investment than Listed Funds. However, Franklin Templeton is 1.34 times more volatile than Listed Funds Trust. It trades about 0.22 of its potential returns per unit of risk. Listed Funds Trust is currently generating about 0.11 per unit of risk. If you would invest  2,439  in Franklin Templeton ETF on December 3, 2023 and sell it today you would earn a total of  93.00  from holding Franklin Templeton ETF or generate 3.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Franklin Templeton ETF  vs.  Listed Funds Trust

 Performance 
       Timeline  
Franklin Templeton ETF 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Franklin Templeton may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Listed Funds Trust 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Listed Funds Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Listed Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Templeton and Listed Funds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Templeton and Listed Funds

The main advantage of trading using opposite Franklin Templeton and Listed Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, Listed Funds 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 Listed Funds will offset losses from the drop in Listed Funds' long position.
The idea behind Franklin Templeton ETF and Listed Funds Trust 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.

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