Correlation Between IShares Treasury and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both IShares Treasury 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 Treasury 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 Treasury Bond and Franklin FTSE Brazil, you can compare the effects of market volatilities on IShares Treasury 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 Treasury with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and Franklin FTSE.
Diversification Opportunities for IShares Treasury and Franklin FTSE
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Franklin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Bond and Franklin FTSE Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Brazil and IShares Treasury 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 Treasury Bond 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 Brazil has no effect on the direction of IShares Treasury i.e., IShares Treasury and Franklin FTSE go up and down completely randomly.
Pair Corralation between IShares Treasury and Franklin FTSE
Assuming the 90 days trading horizon iShares Treasury Bond is expected to generate 0.71 times more return on investment than Franklin FTSE. However, iShares Treasury Bond is 1.41 times less risky than Franklin FTSE. It trades about -0.06 of its potential returns per unit of risk. Franklin FTSE Brazil is currently generating about -0.15 per unit of risk. If you would invest 363.00 in iShares Treasury Bond on September 3, 2024 and sell it today you would lose (13.00) from holding iShares Treasury Bond or give up 3.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Treasury Bond vs. Franklin FTSE Brazil
Performance |
| Timeline |
| iShares Treasury Bond |
| Franklin FTSE Brazil |
IShares Treasury and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Treasury and Franklin FTSE
The main advantage of trading using opposite IShares Treasury and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury 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 Treasury vs. GraniteShares 3x Short | IShares Treasury vs. WisdomTree Natural Gas | IShares Treasury vs. Leverage Shares 3x | IShares Treasury vs. WisdomTree Natural Gas |
| Franklin FTSE vs. Franklin LibertyQ Global | Franklin FTSE vs. Franklin Libertyshares ICAV | Franklin FTSE vs. Franklin FTSE Asia | Franklin FTSE vs. Franklin LibertyQ AC |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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