Correlation Between Avantis Large and Franklin Gold
Can any of the company-specific risk be diversified away by investing in both Avantis Large 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 Avantis Large and Franklin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis Large Cap and Franklin Gold Precious, you can compare the effects of market volatilities on Avantis Large 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 Avantis Large with a short position of Franklin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Large and Franklin Gold.
Diversification Opportunities for Avantis Large and Franklin Gold
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avantis and Franklin is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap 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 Avantis Large 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 Avantis Large Cap 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 Avantis Large i.e., Avantis Large and Franklin Gold go up and down completely randomly.
Pair Corralation between Avantis Large and Franklin Gold
Assuming the 90 days horizon Avantis Large Cap is expected to under-perform the Franklin Gold. But the mutual fund apears to be less risky and, when comparing its historical volatility, Avantis Large Cap is 2.42 times less risky than Franklin Gold. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Franklin Gold Precious is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,777 in Franklin Gold Precious on September 13, 2024 and sell it today you would earn a total of 141.00 from holding Franklin Gold Precious or generate 7.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Large Cap vs. Franklin Gold Precious
Performance |
| Timeline |
| Avantis Large Cap |
| Franklin Gold Precious |
Avantis Large and Franklin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Large and Franklin Gold
The main advantage of trading using opposite Avantis Large and Franklin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Large 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.| Avantis Large vs. Financials Ultrasector Profund | Avantis Large vs. Transamerica Financial Life | Avantis Large vs. Vanguard Financials Index | Avantis Large vs. Mesirow Financial Small |
| Franklin Gold vs. Franklin Mutual Beacon | Franklin Gold vs. Templeton Developing Markets | Franklin Gold vs. Franklin Mutual Global | Franklin Gold vs. Franklin Mutual Global |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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