Correlation Between IShares Trust and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Franklin FTSE 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 IShares Trust and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Franklin FTSE Asia, you can compare the effects of market volatilities on IShares Trust and Franklin FTSE 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 IShares Trust with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Franklin FTSE.
Diversification Opportunities for IShares Trust and Franklin FTSE
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Franklin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Franklin FTSE Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Asia and IShares Trust 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 iShares Trust are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Asia has no effect on the direction of IShares Trust i.e., IShares Trust and Franklin FTSE go up and down completely randomly.
Pair Corralation between IShares Trust and Franklin FTSE
Given the investment horizon of 90 days iShares Trust is expected to generate 1.08 times more return on investment than Franklin FTSE. However, IShares Trust is 1.08 times more volatile than Franklin FTSE Asia. It trades about 0.09 of its potential returns per unit of risk. Franklin FTSE Asia is currently generating about 0.08 per unit of risk. If you would invest 6,638 in iShares Trust on August 28, 2024 and sell it today you would earn a total of 1,551 from holding iShares Trust or generate 23.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
iShares Trust vs. Franklin FTSE Asia
Performance |
| Timeline |
| iShares Trust |
| Franklin FTSE Asia |
IShares Trust and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Franklin FTSE
The main advantage of trading using opposite IShares Trust and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Franklin FTSE 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 Franklin FTSE will offset losses from the drop in Franklin FTSE's long position.| IShares Trust vs. First Trust Exchange Traded | IShares Trust vs. Ultimus Managers Trust | IShares Trust vs. Horizon Kinetics Medical | IShares Trust vs. Harbor Health Care |
| Franklin FTSE vs. Matthews China Active | Franklin FTSE vs. MAYBANK EMERGING ETF | Franklin FTSE vs. Matthews Emerging Markets | Franklin FTSE vs. JP Morgan Exchange Traded |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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