Correlation Between Franklin Equity and First Trust

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

By analyzing existing cross correlation between Franklin Equity Income and First Trust Preferred, you can compare the effects of market volatilities on Franklin Equity and First Trust 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 Equity with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Equity and First Trust.

Diversification Opportunities for Franklin Equity and First Trust

0.0

Correlation Coefficient

Franklin Equity  First Trust

Pay attention - limited upside

The 3 months correlation between Franklin and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Equity Income and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred and Franklin Equity 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 Equity Income are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Preferred has no effect on the direction of Franklin Equity i.e., Franklin Equity and First Trust go up and down completely randomly.

Pair Corralation between Franklin Equity and First Trust

If you would invest  3,167  in Franklin Equity Income on May 20, 2025 and sell it today you would earn a total of  261.00  from holding Franklin Equity Income or generate 8.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Franklin Equity Income  vs.  First Trust Preferred

Franklin Equity Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Equity Income are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Franklin Equity may actually be approaching a critical reversion point that can send shares even higher in September 2025.

First Trust Preferred

Risk-Adjusted Performance

High

Over the last 90 days First Trust Preferred has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Equity and First Trust

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

The idea behind Franklin Equity Income and First Trust Preferred 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.