Correlation Between Franklin Templeton and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and IShares 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 Templeton and IShares Trust 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 iShares Trust , you can compare the effects of market volatilities on Franklin Templeton and IShares 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 Templeton with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and IShares Trust.
Diversification Opportunities for Franklin Templeton and IShares Trust
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and IShares is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and IShares Trust go up and down completely randomly.
Pair Corralation between Franklin Templeton and IShares Trust
Given the investment horizon of 90 days Franklin Templeton is expected to generate 2.3 times less return on investment than IShares Trust. But when comparing it to its historical volatility, Franklin Templeton ETF is 1.41 times less risky than IShares Trust. It trades about 0.1 of its potential returns per unit of risk. iShares Trust is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,559 in iShares Trust on November 9, 2024 and sell it today you would earn a total of 106.00 from holding iShares Trust or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Templeton ETF vs. iShares Trust
Performance |
| Timeline |
| Franklin Templeton ETF |
| iShares Trust |
Franklin Templeton and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and IShares Trust
The main advantage of trading using opposite Franklin Templeton and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, IShares 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| Franklin Templeton vs. Franklin Core Dividend | Franklin Templeton vs. Franklin International Core | Franklin Templeton vs. WisdomTree Trust | Franklin Templeton vs. First Trust Exchange Traded |
| IShares Trust vs. Freedom Day Dividend | IShares Trust vs. Franklin Templeton ETF | IShares Trust vs. iShares MSCI China | IShares Trust vs. Tidal Trust II |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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