Correlation Between FLFR and FLIY
Can any of the company-specific risk be diversified away by investing in both FLFR and FLIY 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 FLFR and FLIY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLFR and FLIY, you can compare the effects of market volatilities on FLFR and FLIY 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 FLFR with a short position of FLIY. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLFR and FLIY.
Diversification Opportunities for FLFR and FLIY
Poor diversification
The 3 months correlation between FLFR and FLIY is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding FLFR and FLIY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLIY and FLFR 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 FLFR are associated (or correlated) with FLIY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLIY has no effect on the direction of FLFR i.e., FLFR and FLIY go up and down completely randomly.
Pair Corralation between FLFR and FLIY
If you would invest 2,746 in FLIY on September 4, 2024 and sell it today you would earn a total of 0.00 from holding FLIY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLFR vs. FLIY
Performance |
| Timeline |
| FLFR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| FLIY |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FLFR and FLIY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLFR and FLIY
The main advantage of trading using opposite FLFR and FLIY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLFR position performs unexpectedly, FLIY 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 FLIY will offset losses from the drop in FLIY's long position.| FLFR vs. Franklin FTSE Germany | FLFR vs. Franklin FTSE United | FLFR vs. Franklin FTSE Mexico | FLFR vs. Franklin FTSE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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