Correlation Between Franklin Templeton and IShares GovernmentCredit
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and IShares GovernmentCredit 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 Templeton and IShares GovernmentCredit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Templeton ETF and iShares GovernmentCredit Bond, you can compare the effects of market volatilities on Franklin Templeton and IShares GovernmentCredit 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 Templeton with a short position of IShares GovernmentCredit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and IShares GovernmentCredit.
Diversification Opportunities for Franklin Templeton and IShares GovernmentCredit
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 Templeton ETF and iShares GovernmentCredit Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares GovernmentCredit and Franklin Templeton 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 Templeton ETF are associated (or correlated) with IShares GovernmentCredit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares GovernmentCredit has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and IShares GovernmentCredit go up and down completely randomly.
Pair Corralation between Franklin Templeton and IShares GovernmentCredit
Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 0.99 times more return on investment than IShares GovernmentCredit. However, Franklin Templeton ETF is 1.01 times less risky than IShares GovernmentCredit. It trades about 0.05 of its potential returns per unit of risk. iShares GovernmentCredit Bond is currently generating about 0.05 per unit of risk. If you would invest 2,133 in Franklin Templeton ETF on August 29, 2024 and sell it today you would earn a total of 9.00 from holding Franklin Templeton ETF or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Templeton ETF vs. iShares GovernmentCredit Bond
Performance |
| Timeline |
| Franklin Templeton ETF |
| IShares GovernmentCredit |
Franklin Templeton and IShares GovernmentCredit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and IShares GovernmentCredit
The main advantage of trading using opposite Franklin Templeton and IShares GovernmentCredit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, IShares GovernmentCredit 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 GovernmentCredit will offset losses from the drop in IShares GovernmentCredit's long position.| Franklin Templeton vs. Franklin Liberty Investment | Franklin Templeton vs. iShares ESG Aggregate | Franklin Templeton vs. Franklin LibertyQ Equity | Franklin Templeton vs. Franklin Liberty Short |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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