Correlation Between Franklin Templeton and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and IShares MSCI 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 MSCI 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 MSCI China, you can compare the effects of market volatilities on Franklin Templeton and IShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and IShares MSCI.
Diversification Opportunities for Franklin Templeton and IShares MSCI
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and IShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI China has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and IShares MSCI go up and down completely randomly.
Pair Corralation between Franklin Templeton and IShares MSCI
Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 0.46 times more return on investment than IShares MSCI. However, Franklin Templeton ETF is 2.18 times less risky than IShares MSCI. It trades about -0.05 of its potential returns per unit of risk. iShares MSCI China is currently generating about -0.05 per unit of risk. If you would invest 2,759 in Franklin Templeton ETF on October 26, 2024 and sell it today you would lose (79.00) from holding Franklin Templeton ETF or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Templeton ETF vs. iShares MSCI China
Performance |
| Timeline |
| Franklin Templeton ETF |
| iShares MSCI China |
Franklin Templeton and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and IShares MSCI
The main advantage of trading using opposite Franklin Templeton and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI'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 MSCI vs. KraneShares CSI China | IShares MSCI vs. Invesco China Technology | IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Xtrackers Harvest CSI |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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