Correlation Between IShares Core and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core MSCI and Franklin FTSE Europe, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Franklin FTSE.
Diversification Opportunities for IShares Core and Franklin FTSE
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Franklin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Franklin FTSE Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Europe and IShares Core 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 Core MSCI 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 Europe has no effect on the direction of IShares Core i.e., IShares Core and Franklin FTSE go up and down completely randomly.
Pair Corralation between IShares Core and Franklin FTSE
Given the investment horizon of 90 days IShares Core is expected to generate 1.05 times less return on investment than Franklin FTSE. In addition to that, IShares Core is 1.04 times more volatile than Franklin FTSE Europe. It trades about 0.05 of its total potential returns per unit of risk. Franklin FTSE Europe is currently generating about 0.05 per unit of volatility. If you would invest 2,690 in Franklin FTSE Europe on November 3, 2024 and sell it today you would earn a total of 260.50 from holding Franklin FTSE Europe or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. Franklin FTSE Europe
Performance |
| Timeline |
| iShares Core MSCI |
| Franklin FTSE Europe |
IShares Core and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Franklin FTSE
The main advantage of trading using opposite IShares Core and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core vs. iShares Core MSCI | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares MSCI Europe | IShares Core vs. iShares Currency Hedged |
| Franklin FTSE vs. Franklin FTSE United | Franklin FTSE vs. SPDR Portfolio Europe | Franklin FTSE vs. Franklin FTSE Germany | Franklin FTSE 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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