Correlation Between IShares MSCI and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Franklin Templeton 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 MSCI and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI China and Franklin Templeton ETF, you can compare the effects of market volatilities on IShares MSCI and Franklin Templeton 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 MSCI with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Franklin Templeton.
Diversification Opportunities for IShares MSCI and Franklin Templeton
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF and IShares 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 iShares MSCI China are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton ETF has no effect on the direction of IShares MSCI i.e., IShares MSCI and Franklin Templeton go up and down completely randomly.
Pair Corralation between IShares MSCI and Franklin Templeton
Given the investment horizon of 90 days iShares MSCI China is expected to under-perform the Franklin Templeton. In addition to that, IShares MSCI is 2.17 times more volatile than Franklin Templeton ETF. It trades about -0.07 of its total potential returns per unit of risk. Franklin Templeton ETF is currently generating about -0.05 per unit of volatility. If you would invest 2,725 in Franklin Templeton ETF on September 1, 2024 and sell it today you would lose (32.00) from holding Franklin Templeton ETF or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI China vs. Franklin Templeton ETF
Performance |
| Timeline |
| iShares MSCI China |
| Franklin Templeton ETF |
IShares MSCI and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Franklin Templeton
The main advantage of trading using opposite IShares MSCI and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.| IShares MSCI vs. KraneShares CSI China | IShares MSCI vs. Invesco China Technology | IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Xtrackers Harvest CSI |
| Franklin Templeton vs. Xtrackers MSCI Emerging | Franklin Templeton vs. FlexShares Morningstar Emerging | Franklin Templeton vs. First Trust Emerging |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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