Correlation Between World Energy and Franklin Gold
Can any of the company-specific risk be diversified away by investing in both World Energy and Franklin Gold 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 World Energy and Franklin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Franklin Gold Precious, you can compare the effects of market volatilities on World Energy and Franklin Gold 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 World Energy with a short position of Franklin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Franklin Gold.
Diversification Opportunities for World Energy and Franklin Gold
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between World and Franklin is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Franklin Gold Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Gold Precious and World Energy 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 World Energy Fund are associated (or correlated) with Franklin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Gold Precious has no effect on the direction of World Energy i.e., World Energy and Franklin Gold go up and down completely randomly.
Pair Corralation between World Energy and Franklin Gold
Assuming the 90 days horizon World Energy Fund is expected to generate 0.76 times more return on investment than Franklin Gold. However, World Energy Fund is 1.31 times less risky than Franklin Gold. It trades about 0.05 of its potential returns per unit of risk. Franklin Gold Precious is currently generating about 0.04 per unit of risk. If you would invest 1,216 in World Energy Fund on October 27, 2024 and sell it today you would earn a total of 406.00 from holding World Energy Fund or generate 33.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Franklin Gold Precious
Performance |
| Timeline |
| World Energy |
| Franklin Gold Precious |
World Energy and Franklin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Franklin Gold
The main advantage of trading using opposite World Energy and Franklin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Franklin Gold 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 Gold will offset losses from the drop in Franklin Gold's long position.| World Energy vs. Calvert Large Cap | World Energy vs. Ab Large Cap | World Energy vs. Transamerica Large Cap | World Energy vs. Avantis Large Cap |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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