Correlation Between Franklin FTSE and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE 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 FTSE 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 FTSE Asia and iShares MSCI All, you can compare the effects of market volatilities on Franklin FTSE 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 FTSE with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and IShares MSCI.
Diversification Opportunities for Franklin FTSE and IShares MSCI
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Asia and iShares MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI All and Franklin FTSE 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 FTSE Asia 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 All has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and IShares MSCI go up and down completely randomly.
Pair Corralation between Franklin FTSE and IShares MSCI
Given the investment horizon of 90 days Franklin FTSE is expected to generate 1.03 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, Franklin FTSE Asia is 1.04 times less risky than IShares MSCI. It trades about 0.08 of its potential returns per unit of risk. iShares MSCI All is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,282 in iShares MSCI All on August 28, 2024 and sell it today you would earn a total of 1,129 from holding iShares MSCI All or generate 17.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin FTSE Asia vs. iShares MSCI All
Performance |
| Timeline |
| Franklin FTSE Asia |
| iShares MSCI All |
Franklin FTSE and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and IShares MSCI
The main advantage of trading using opposite Franklin FTSE and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE 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 FTSE vs. Matthews China Active | Franklin FTSE vs. MAYBANK EMERGING ETF | Franklin FTSE vs. Matthews Emerging Markets | Franklin FTSE vs. JP Morgan Exchange Traded |
| IShares MSCI vs. Matthews China Active | IShares MSCI vs. MAYBANK EMERGING ETF | IShares MSCI vs. Matthews Emerging Markets | IShares MSCI 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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