Correlation Between Franklin Templeton and KraneShares MSCI

Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and KraneShares MSCI 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 Franklin Templeton and KraneShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Templeton ETF and KraneShares MSCI One, you can compare the effects of market volatilities on Franklin Templeton and KraneShares MSCI 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 Franklin Templeton with a short position of KraneShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and KraneShares MSCI.

Diversification Opportunities for Franklin Templeton and KraneShares MSCI

0.89

Correlation Coefficient

Franklin Templeton  KraneShares MSCI

Very poor diversification

The 3 months correlation between Franklin and KraneShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and KraneShares MSCI One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI One and Franklin Templeton 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 Franklin Templeton ETF are associated (or correlated) with KraneShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares MSCI One has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and KraneShares MSCI go up and down completely randomly.

Pair Corralation between Franklin Templeton and KraneShares MSCI

Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 1.42 times more return on investment than KraneShares MSCI. However, Franklin Templeton is 1.42 times more volatile than KraneShares MSCI One. It trades about 0.04 of its potential returns per unit of risk. KraneShares MSCI One is currently generating about 0.05 per unit of risk. If you would invest  2,658  in Franklin Templeton ETF on December 30, 2024 and sell it today you would earn a total of  57.00  from holding Franklin Templeton ETF or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Franklin Templeton ETF  vs.  KraneShares MSCI One

Franklin Templeton ETF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

KraneShares MSCI One

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares MSCI One are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, KraneShares MSCI is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Franklin Templeton and KraneShares MSCI

The main advantage of trading using opposite Franklin Templeton and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, KraneShares MSCI 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 KraneShares MSCI will offset losses from the drop in KraneShares MSCI's long position.

The idea behind Franklin Templeton ETF and KraneShares MSCI One pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.