Correlation Between IShares Core and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Aggregate and Franklin Templeton ETF, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Franklin Templeton.
Diversification Opportunities for IShares Core and Franklin Templeton
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Franklin is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Aggregate 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 IShares Core 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 iShares Core Aggregate 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 IShares Core i.e., IShares Core and Franklin Templeton go up and down completely randomly.
Pair Corralation between IShares Core and Franklin Templeton
Considering the 90-day investment horizon iShares Core Aggregate is expected to under-perform the Franklin Templeton. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core Aggregate is 1.01 times less risky than Franklin Templeton. The etf trades about -0.23 of its potential returns per unit of risk. The Franklin Templeton ETF is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 2,193 in Franklin Templeton ETF on August 25, 2024 and sell it today you would lose (68.00) from holding Franklin Templeton ETF or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Aggregate vs. Franklin Templeton ETF
Performance |
| Timeline |
| iShares Core Aggregate |
| Franklin Templeton ETF |
IShares Core and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Franklin Templeton
The main advantage of trading using opposite IShares Core and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. iShares MSCI EAFE | IShares Core vs. iShares iBoxx Investment | IShares Core vs. iShares TIPS Bond | IShares Core vs. iShares 1 3 Year |
| Franklin Templeton vs. Franklin Liberty Investment | Franklin Templeton vs. iShares ESG Aggregate | Franklin Templeton vs. Franklin LibertyQ Equity | Franklin Templeton vs. Franklin Liberty Short |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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