Correlation Between Franklin Global and IShares Core
Can any of the company-specific risk be diversified away by investing in both Franklin Global and IShares Core 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 Global and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Global Aggregate and iShares Core Canadian, you can compare the effects of market volatilities on Franklin Global and IShares Core 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 Global with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Global and IShares Core.
Diversification Opportunities for Franklin Global and IShares Core
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and IShares is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Global Aggregate and iShares Core Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Canadian and Franklin Global 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 Global Aggregate are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Canadian has no effect on the direction of Franklin Global i.e., Franklin Global and IShares Core go up and down completely randomly.
Pair Corralation between Franklin Global and IShares Core
Assuming the 90 days trading horizon Franklin Global Aggregate is expected to generate 1.14 times more return on investment than IShares Core. However, Franklin Global is 1.14 times more volatile than iShares Core Canadian. It trades about 0.05 of its potential returns per unit of risk. iShares Core Canadian is currently generating about -0.03 per unit of risk. If you would invest 1,894 in Franklin Global Aggregate on August 27, 2024 and sell it today you would earn a total of 5.00 from holding Franklin Global Aggregate or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Global Aggregate vs. iShares Core Canadian
Performance |
| Timeline |
| Franklin Global Aggregate |
| iShares Core Canadian |
Franklin Global and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Global and IShares Core
The main advantage of trading using opposite Franklin Global and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Global position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.The idea behind Franklin Global Aggregate and iShares Core Canadian pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares Core vs. Franklin Global Aggregate | IShares Core vs. Franklin Large Cap | IShares Core vs. First Trust Senior | IShares Core vs. BMO Aggregate Bond |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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