Correlation Between KraneShares MSCI and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both KraneShares MSCI 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 KraneShares MSCI and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares MSCI All and Franklin FTSE South, you can compare the effects of market volatilities on KraneShares MSCI 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 KraneShares MSCI with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares MSCI and Franklin FTSE.
Diversification Opportunities for KraneShares MSCI and Franklin FTSE
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between KraneShares and Franklin is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares MSCI All and Franklin FTSE South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE South and KraneShares MSCI 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 KraneShares MSCI All 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 South has no effect on the direction of KraneShares MSCI i.e., KraneShares MSCI and Franklin FTSE go up and down completely randomly.
Pair Corralation between KraneShares MSCI and Franklin FTSE
Given the investment horizon of 90 days KraneShares MSCI All is expected to generate 1.4 times more return on investment than Franklin FTSE. However, KraneShares MSCI is 1.4 times more volatile than Franklin FTSE South. It trades about 0.04 of its potential returns per unit of risk. Franklin FTSE South is currently generating about -0.01 per unit of risk. If you would invest 1,783 in KraneShares MSCI All on September 4, 2024 and sell it today you would earn a total of 317.00 from holding KraneShares MSCI All or generate 17.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares MSCI All vs. Franklin FTSE South
Performance |
| Timeline |
| KraneShares MSCI All |
| Franklin FTSE South |
KraneShares MSCI and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares MSCI and Franklin FTSE
The main advantage of trading using opposite KraneShares MSCI and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares MSCI 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.| KraneShares MSCI vs. Franklin FTSE South | KraneShares MSCI vs. Franklin FTSE Japan | KraneShares MSCI vs. Franklin FTSE India | KraneShares MSCI 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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