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 Latin and iShares MSCI Brazil, 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
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Latin and iShares MSCI Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Brazil 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 Latin 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 Brazil 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 Latin is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Franklin FTSE Latin is 1.14 times less risky than IShares MSCI. The etf trades about -0.17 of its potential returns per unit of risk. The iShares MSCI Brazil is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 2,801 in iShares MSCI Brazil on August 24, 2024 and sell it today you would lose (109.00) from holding iShares MSCI Brazil or give up 3.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin FTSE Latin vs. iShares MSCI Brazil
Performance |
| Timeline |
| Franklin FTSE Latin |
| iShares MSCI Brazil |
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 Mexico | Franklin FTSE vs. Franklin FTSE Brazil | Franklin FTSE vs. Franklin FTSE India | Franklin FTSE vs. Franklin FTSE Taiwan |
| IShares MSCI vs. Franklin FTSE Mexico | IShares MSCI vs. Franklin FTSE India | IShares MSCI vs. Franklin FTSE South | IShares MSCI vs. Franklin FTSE Japan |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |