Correlation Between IShares Russell and Franklin Templeton

Can any of the company-specific risk be diversified away by investing in both IShares Russell 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 Russell 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 Russell 1000 and Franklin Templeton Investments, you can compare the effects of market volatilities on IShares Russell 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 Russell with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Franklin Templeton.

Diversification Opportunities for IShares Russell and Franklin Templeton

-0.02

Correlation Coefficient

IShares Russell  Franklin Templeton

Good diversification

The 3 months correlation between IShares and Franklin is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and Franklin Templeton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and IShares Russell 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 Russell 1000 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 has no effect on the direction of IShares Russell i.e., IShares Russell and Franklin Templeton go up and down completely randomly.

Pair Corralation between IShares Russell and Franklin Templeton

If you would invest  0.00  in Franklin Templeton Investments on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Franklin Templeton Investments or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

iShares Russell 1000  vs.  Franklin Templeton Investments

iShares Russell 1000

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Russell 1000 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Russell is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Franklin Templeton

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Franklin Templeton Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Russell and Franklin Templeton

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

The idea behind iShares Russell 1000 and Franklin Templeton Investments 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.