Correlation Between Franklin FTSE and IShares China
Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and IShares China 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 China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin FTSE Japan and iShares China Large Cap, you can compare the effects of market volatilities on Franklin FTSE and IShares China 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 China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and IShares China.
Diversification Opportunities for Franklin FTSE and IShares China
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and IShares is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Japan and iShares China Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China Large 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 Japan are associated (or correlated) with IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China Large has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and IShares China go up and down completely randomly.
Pair Corralation between Franklin FTSE and IShares China
Given the investment horizon of 90 days Franklin FTSE is expected to generate 2.35 times less return on investment than IShares China. But when comparing it to its historical volatility, Franklin FTSE Japan is 1.91 times less risky than IShares China. It trades about 0.05 of its potential returns per unit of risk. iShares China Large Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,303 in iShares China Large Cap on September 3, 2024 and sell it today you would earn a total of 728.00 from holding iShares China Large Cap or generate 31.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin FTSE Japan vs. iShares China Large Cap
Performance |
| Timeline |
| Franklin FTSE Japan |
| iShares China Large |
Franklin FTSE and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin FTSE and IShares China
The main advantage of trading using opposite Franklin FTSE and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, IShares China 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 China will offset losses from the drop in IShares China's long position.| Franklin FTSE vs. JPMorgan BetaBuilders Japan | Franklin FTSE vs. Franklin FTSE South | Franklin FTSE vs. Franklin FTSE United | Franklin FTSE vs. Franklin FTSE China |
| IShares China vs. Franklin FTSE South | IShares China vs. Franklin FTSE Japan | IShares China vs. Franklin FTSE India | IShares China vs. Franklin FTSE Brazil |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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