Correlation Between IShares Trust and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Franklin Templeton 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 Templeton 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 Templeton ETF, you can compare the effects of market volatilities on IShares Trust and Franklin Templeton 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 Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Franklin Templeton.
Diversification Opportunities for IShares Trust and Franklin Templeton
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Franklin is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF 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 Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton ETF has no effect on the direction of IShares Trust i.e., IShares Trust and Franklin Templeton go up and down completely randomly.
Pair Corralation between IShares Trust and Franklin Templeton
Given the investment horizon of 90 days iShares Trust is expected to generate 3.54 times more return on investment than Franklin Templeton. However, IShares Trust is 3.54 times more volatile than Franklin Templeton ETF. It trades about 0.02 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about -0.1 per unit of risk. If you would invest 8,038 in iShares Trust on August 25, 2024 and sell it today you would earn a total of 30.00 from holding iShares Trust or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Franklin Templeton ETF
Performance |
| Timeline |
| iShares Trust |
| Franklin Templeton ETF |
IShares Trust and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Franklin Templeton
The main advantage of trading using opposite IShares Trust and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.| IShares Trust vs. Invesco DWA Utilities | IShares Trust vs. Invesco Dynamic Large | IShares Trust vs. Invesco Dynamic Large | IShares Trust vs. HUMANA INC |
| Franklin Templeton vs. Franklin Liberty Investment | Franklin Templeton vs. iShares ESG Aggregate | Franklin Templeton vs. Franklin LibertyQ Equity | Franklin Templeton vs. Franklin Liberty Short |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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