diversifiable risk of combining IShares AsiaPacific 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 AsiaPacific Dividend and Franklin Templeton ETF, you can compare the effects of market volatilities on IShares AsiaPacific 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 AsiaPacific with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares AsiaPacific and Franklin Templeton.
Diversification Opportunities for IShares AsiaPacific and Franklin Templeton
Pair Corralation between IShares AsiaPacific and Franklin Templeton
Given the investment horizon of 90 days IShares AsiaPacific is expected to generate 1.83 times less return on investment than Franklin Templeton. In addition to that, IShares AsiaPacific is 1.01 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 0.12 per unit of volatility. If you would invest 2,444 in Franklin Templeton ETF on November 30, 2023 and sell it today you would earn a total of 54.00 from holding Franklin Templeton ETF or generate 2.21% return on investment over 90 days.
IShares AsiaPacific Dividend vs. Franklin Templeton ETF
IShares AsiaPacific and Franklin Templeton Volatility Contrast
Pair Trading with IShares AsiaPacific and Franklin TempletonThe main advantage of trading using opposite IShares AsiaPacific and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares AsiaPacific 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 AsiaPacific Dividend and Franklin Templeton ETF 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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