Correlation Between IShares AsiaPacific and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both IShares AsiaPacific and Franklin FTSE 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 AsiaPacific and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares AsiaPacific Dividend and Franklin FTSE Asia, you can compare the effects of market volatilities on IShares AsiaPacific and Franklin FTSE 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 AsiaPacific with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares AsiaPacific and Franklin FTSE.
Diversification Opportunities for IShares AsiaPacific and Franklin FTSE
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Franklin is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares AsiaPacific Dividend and Franklin FTSE Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Asia and IShares AsiaPacific 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 AsiaPacific Dividend are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Asia has no effect on the direction of IShares AsiaPacific i.e., IShares AsiaPacific and Franklin FTSE go up and down completely randomly.
Pair Corralation between IShares AsiaPacific and Franklin FTSE
Given the investment horizon of 90 days iShares AsiaPacific Dividend is expected to generate 0.86 times more return on investment than Franklin FTSE. However, iShares AsiaPacific Dividend is 1.16 times less risky than Franklin FTSE. It trades about 0.06 of its potential returns per unit of risk. Franklin FTSE Asia is currently generating about 0.04 per unit of risk. If you would invest 2,888 in iShares AsiaPacific Dividend on August 28, 2024 and sell it today you would earn a total of 836.00 from holding iShares AsiaPacific Dividend or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares AsiaPacific Dividend vs. Franklin FTSE Asia
Performance |
| Timeline |
| iShares AsiaPacific |
| Franklin FTSE Asia |
IShares AsiaPacific and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares AsiaPacific and Franklin FTSE
The main advantage of trading using opposite IShares AsiaPacific and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares AsiaPacific position performs unexpectedly, Franklin FTSE 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 FTSE will offset losses from the drop in Franklin FTSE's long position.| IShares AsiaPacific vs. Matthews China Active | IShares AsiaPacific vs. MAYBANK EMERGING ETF | IShares AsiaPacific vs. Matthews Emerging Markets | IShares AsiaPacific vs. JP Morgan Exchange Traded |
| Franklin FTSE vs. Matthews China Active | Franklin FTSE vs. MAYBANK EMERGING ETF | Franklin FTSE vs. Matthews Emerging Markets | Franklin FTSE vs. JP Morgan Exchange Traded |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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