Correlation Between Touchstone ETF and Franklin Templeton

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

Diversification Opportunities for Touchstone ETF and Franklin Templeton

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Touchstone and Franklin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone ETF Trust 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 Touchstone ETF 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 Touchstone ETF Trust 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 Touchstone ETF i.e., Touchstone ETF and Franklin Templeton go up and down completely randomly.

Pair Corralation between Touchstone ETF and Franklin Templeton

Given the investment horizon of 90 days Touchstone ETF Trust is expected to generate 0.74 times more return on investment than Franklin Templeton. However, Touchstone ETF Trust is 1.36 times less risky than Franklin Templeton. It trades about 0.19 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about 0.11 per unit of risk. If you would invest  2,524  in Touchstone ETF Trust on November 30, 2023 and sell it today you would earn a total of  344.00  from holding Touchstone ETF Trust or generate 13.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Touchstone ETF Trust  vs.  Franklin Templeton ETF

 Performance 
       Timeline  
Touchstone ETF Trust 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone ETF Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Touchstone ETF is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
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 March 2024.

Touchstone ETF and Franklin Templeton Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Touchstone ETF and Franklin Templeton

The main advantage of trading using opposite Touchstone ETF and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone ETF 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 Touchstone ETF Trust 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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