Correlation Between IShares and Franklin FTSE

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

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

Diversification Opportunities for IShares and Franklin FTSE

0.0

Correlation Coefficient

IShares  Franklin FTSE

Pay attention - limited upside

The 3 months correlation between IShares and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IShares and Franklin FTSE Germany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Germany and IShares 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 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 Germany has no effect on the direction of IShares i.e., IShares and Franklin FTSE go up and down completely randomly.

Pair Corralation between IShares and Franklin FTSE

If you would invest  2,507  in Franklin FTSE Germany on December 29, 2024 and sell it today you would earn a total of  445.00  from holding Franklin FTSE Germany or generate 17.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

IShares  vs.  Franklin FTSE Germany

IShares

Risk-Adjusted Performance

Very Weak

Over the last 90 days IShares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IShares is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Franklin FTSE Germany

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin FTSE Germany are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Franklin FTSE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares and Franklin FTSE

The main advantage of trading using opposite IShares and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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.

The idea behind IShares and Franklin FTSE Germany 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.