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 Canada and iShares MSCI Hong, 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
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and IShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Canada and iShares MSCI Hong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Hong 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 Canada 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 Hong 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 Canada is expected to generate 0.49 times more return on investment than IShares MSCI. However, Franklin FTSE Canada is 2.04 times less risky than IShares MSCI. It trades about 0.44 of its potential returns per unit of risk. iShares MSCI Hong is currently generating about -0.08 per unit of risk. If you would invest 3,691 in Franklin FTSE Canada on September 1, 2024 and sell it today you would earn a total of 246.00 from holding Franklin FTSE Canada or generate 6.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin FTSE Canada vs. iShares MSCI Hong
Performance |
| Timeline |
| Franklin FTSE Canada |
| iShares MSCI Hong |
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. Franklin FTSE Australia | Franklin FTSE vs. Franklin FTSE Germany | Franklin FTSE vs. Franklin FTSE United | Franklin FTSE vs. Franklin FTSE Japan |
| IShares MSCI vs. iShares MSCI Singapore | IShares MSCI vs. iShares MSCI Taiwan | IShares MSCI vs. iShares MSCI Malaysia | IShares MSCI vs. iShares MSCI Australia |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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