Correlation Between Franklin International and Invesco Exchange

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

By analyzing existing cross correlation between Franklin International Core and Invesco Exchange Traded, you can compare the effects of market volatilities on Franklin International and Invesco Exchange 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 International with a short position of Invesco Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin International and Invesco Exchange.

Diversification Opportunities for Franklin International and Invesco Exchange

0.87

Correlation Coefficient

Franklin International  Invesco Exchange

Very poor diversification

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

Pair Corralation between Franklin International and Invesco Exchange

Given the investment horizon of 90 days Franklin International is expected to generate 1.16 times less return on investment than Invesco Exchange. In addition to that, Franklin International is 1.01 times more volatile than Invesco Exchange Traded. It trades about 0.12 of its total potential returns per unit of risk. Invesco Exchange Traded is currently generating about 0.14 per unit of volatility. If you would invest  2,970  in Invesco Exchange Traded on May 7, 2025 and sell it today you would earn a total of  201.00  from holding Invesco Exchange Traded or generate 6.77% return on investment over 90 days.

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

Franklin International Core  vs.  Invesco Exchange Traded

Franklin International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin International Core are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Franklin International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Invesco Exchange Traded

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Exchange Traded are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Invesco Exchange may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Franklin International and Invesco Exchange

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

The idea behind Franklin International Core and Invesco Exchange Traded 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.