Correlation Between IShares Russell and Franklin Income
Can any of the company-specific risk be diversified away by investing in both IShares Russell and Franklin Income 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 Russell and Franklin Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Russell 1000 and Franklin Income Equity, you can compare the effects of market volatilities on IShares Russell and Franklin Income 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 Russell with a short position of Franklin Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Franklin Income.
Diversification Opportunities for IShares Russell and Franklin Income
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Franklin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and Franklin Income Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Income Equity and IShares Russell 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 Russell 1000 are associated (or correlated) with Franklin Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Income Equity has no effect on the direction of IShares Russell i.e., IShares Russell and Franklin Income go up and down completely randomly.
Pair Corralation between IShares Russell and Franklin Income
Considering the 90-day investment horizon iShares Russell 1000 is expected to generate 1.57 times more return on investment than Franklin Income. However, IShares Russell is 1.57 times more volatile than Franklin Income Equity. It trades about 0.4 of its potential returns per unit of risk. Franklin Income Equity is currently generating about 0.29 per unit of risk. If you would invest 31,224 in iShares Russell 1000 on September 1, 2024 and sell it today you would earn a total of 2,029 from holding iShares Russell 1000 or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Russell 1000 vs. Franklin Income Equity
Performance |
| Timeline |
| iShares Russell 1000 |
| Franklin Income Equity |
IShares Russell and Franklin Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and Franklin Income
The main advantage of trading using opposite IShares Russell and Franklin Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, Franklin Income 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 Income will offset losses from the drop in Franklin Income's long position.| IShares Russell vs. iShares Russell 3000 | IShares Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Russell 2000 |
| Franklin Income vs. Vanguard Total Stock | Franklin Income vs. SPDR SP 500 | Franklin Income vs. iShares Core SP | Franklin Income vs. Vanguard Dividend Appreciation |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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