Correlation Between Franklin FTSE and KraneShares MSCI

Can any of the company-specific risk be diversified away by investing in both Franklin FTSE 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 FTSE 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 FTSE India and KraneShares MSCI All, you can compare the effects of market volatilities on Franklin FTSE 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 FTSE with a short position of KraneShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and KraneShares MSCI.

Diversification Opportunities for Franklin FTSE and KraneShares MSCI

-0.55

Correlation Coefficient

Franklin FTSE  KraneShares MSCI

Excellent diversification

The 3 months correlation between Franklin and KraneShares is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE India and KraneShares MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI All and Franklin FTSE 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 FTSE India 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 All has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and KraneShares MSCI go up and down completely randomly.

Pair Corralation between Franklin FTSE and KraneShares MSCI

Given the investment horizon of 90 days Franklin FTSE India is expected to under-perform the KraneShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Franklin FTSE India is 1.81 times less risky than KraneShares MSCI. The etf trades about -0.04 of its potential returns per unit of risk. The KraneShares MSCI All is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,434  in KraneShares MSCI All on December 30, 2024 and sell it today you would earn a total of  122.00  from holding KraneShares MSCI All or generate 8.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Franklin FTSE India  vs.  KraneShares MSCI All

Franklin FTSE India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin FTSE India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Franklin FTSE is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

KraneShares MSCI All

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares MSCI All are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, KraneShares MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Franklin FTSE and KraneShares MSCI

The main advantage of trading using opposite Franklin FTSE and KraneShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE 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 FTSE India and KraneShares MSCI All 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.