Correlation Between IShares MSCI and Franklin International
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Franklin International 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 MSCI and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and Franklin International Core, you can compare the effects of market volatilities on IShares MSCI and Franklin International 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 MSCI with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Franklin International.
Diversification Opportunities for IShares MSCI and Franklin International
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and Franklin International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and IShares MSCI 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 MSCI EAFE are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of IShares MSCI i.e., IShares MSCI and Franklin International go up and down completely randomly.
Pair Corralation between IShares MSCI and Franklin International
Considering the 90-day investment horizon iShares MSCI EAFE is expected to generate 1.0 times more return on investment than Franklin International. However, iShares MSCI EAFE is 1.0 times less risky than Franklin International. It trades about -0.13 of its potential returns per unit of risk. Franklin International Core is currently generating about -0.18 per unit of risk. If you would invest 5,525 in iShares MSCI EAFE on August 24, 2024 and sell it today you would lose (136.00) from holding iShares MSCI EAFE or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. Franklin International Core
Performance |
| Timeline |
| iShares MSCI EAFE |
| Franklin International |
IShares MSCI and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Franklin International
The main advantage of trading using opposite IShares MSCI and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Franklin International 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 International will offset losses from the drop in Franklin International's long position.| IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. WisdomTree International SmallCap | IShares MSCI vs. iShares Russell Mid Cap |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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