Correlation Between IShares Dow and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both IShares Dow 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 Dow 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 Dow Jones and Franklin FTSE Brazil, you can compare the effects of market volatilities on IShares Dow 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 Dow with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Dow and Franklin FTSE.
Diversification Opportunities for IShares Dow and Franklin FTSE
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and Franklin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dow Jones 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 Dow 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 Dow Jones 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 Dow i.e., IShares Dow and Franklin FTSE go up and down completely randomly.
Pair Corralation between IShares Dow and Franklin FTSE
Assuming the 90 days trading horizon iShares Dow Jones is expected to generate 0.56 times more return on investment than Franklin FTSE. However, iShares Dow Jones is 1.78 times less risky than Franklin FTSE. It trades about 0.08 of its potential returns per unit of risk. Franklin FTSE Brazil is currently generating about 0.01 per unit of risk. If you would invest 5,477 in iShares Dow Jones on September 3, 2024 and sell it today you would earn a total of 2,032 from holding iShares Dow Jones or generate 37.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Dow Jones vs. Franklin FTSE Brazil
Performance |
| Timeline |
| iShares Dow Jones |
| Franklin FTSE Brazil |
IShares Dow and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Dow and Franklin FTSE
The main advantage of trading using opposite IShares Dow and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Dow 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 Dow vs. Leverage Shares 3x | IShares Dow vs. WisdomTree Natural Gas | IShares Dow vs. Leverage Shares 3x | IShares Dow vs. GraniteShares 3x Short |
| Franklin FTSE vs. Franklin LibertyQ Global | Franklin FTSE vs. Franklin Libertyshares ICAV | Franklin FTSE vs. Franklin FTSE Asia | Franklin FTSE vs. Franklin FTSE Brazil |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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