Correlation Between Franklin FTSE and IShares AsiaPacific
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and IShares AsiaPacific 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 AsiaPacific 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 AsiaPacific Dividend, you can compare the effects of market volatilities on Franklin FTSE and IShares AsiaPacific 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 AsiaPacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and IShares AsiaPacific.
Diversification Opportunities for Franklin FTSE and IShares AsiaPacific
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Asia and iShares AsiaPacific Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares AsiaPacific 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 AsiaPacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares AsiaPacific has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and IShares AsiaPacific go up and down completely randomly.
Pair Corralation between Franklin FTSE and IShares AsiaPacific
Given the investment horizon of 90 days Franklin FTSE Asia is expected to generate 1.2 times more return on investment than IShares AsiaPacific. However, Franklin FTSE is 1.2 times more volatile than iShares AsiaPacific Dividend. It trades about 0.06 of its potential returns per unit of risk. iShares AsiaPacific Dividend is currently generating about 0.04 per unit of risk. If you would invest 1,960 in Franklin FTSE Asia on November 9, 2024 and sell it today you would earn a total of 346.00 from holding Franklin FTSE Asia or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin FTSE Asia vs. iShares AsiaPacific Dividend
Performance |
| Timeline |
| Franklin FTSE Asia |
| iShares AsiaPacific |
Franklin FTSE and IShares AsiaPacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and IShares AsiaPacific
The main advantage of trading using opposite Franklin FTSE and IShares AsiaPacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, IShares AsiaPacific 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 AsiaPacific will offset losses from the drop in IShares AsiaPacific's long position.| Franklin FTSE vs. Franklin FTSE Australia | Franklin FTSE vs. Franklin FTSE Japan | Franklin FTSE vs. Franklin FTSE Japan | Franklin FTSE vs. Franklin FTSE India |
| IShares AsiaPacific vs. Freedom Day Dividend | IShares AsiaPacific vs. Franklin Templeton ETF | IShares AsiaPacific vs. iShares MSCI China | IShares AsiaPacific 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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