Correlation Between Franklin Templeton and WisdomTree Inflation

Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and WisdomTree Inflation 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 WisdomTree Inflation 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 WisdomTree Inflation Plus, you can compare the effects of market volatilities on Franklin Templeton and WisdomTree Inflation 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 WisdomTree Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and WisdomTree Inflation.

Diversification Opportunities for Franklin Templeton and WisdomTree Inflation

0.74

Correlation Coefficient

Franklin Templeton  WisdomTree Inflation

Poor diversification

The 3 months correlation between Franklin and WisdomTree is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and WisdomTree Inflation Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Inflation Plus 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 WisdomTree Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Inflation Plus has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and WisdomTree Inflation go up and down completely randomly.

Pair Corralation between Franklin Templeton and WisdomTree Inflation

Given the investment horizon of 90 days Franklin Templeton is expected to generate 1.04 times less return on investment than WisdomTree Inflation. In addition to that, Franklin Templeton is 1.25 times more volatile than WisdomTree Inflation Plus. It trades about 0.1 of its total potential returns per unit of risk. WisdomTree Inflation Plus is currently generating about 0.13 per unit of volatility. If you would invest  3,030  in WisdomTree Inflation Plus on July 13, 2025 and sell it today you would earn a total of  156.00  from holding WisdomTree Inflation Plus or generate 5.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Franklin Templeton ETF  vs.  WisdomTree Inflation Plus

Franklin Templeton ETF

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 8 (%) 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 recent stock price disarray, may contribute to short-term losses for the investors.

WisdomTree Inflation Plus

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Inflation Plus are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, WisdomTree Inflation is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Franklin Templeton and WisdomTree Inflation

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

The idea behind Franklin Templeton ETF and WisdomTree Inflation Plus 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.