Correlation Between Davis Financial and Franklin Gold
Can any of the company-specific risk be diversified away by investing in both Davis Financial 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 Davis Financial and Franklin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Financial Fund and Franklin Gold And, you can compare the effects of market volatilities on Davis Financial 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 Davis Financial with a short position of Franklin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Franklin Gold.
Diversification Opportunities for Davis Financial and Franklin Gold
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Davis and Franklin is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Franklin Gold And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Gold And and Davis Financial 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 Davis Financial 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 And has no effect on the direction of Davis Financial i.e., Davis Financial and Franklin Gold go up and down completely randomly.
Pair Corralation between Davis Financial and Franklin Gold
Assuming the 90 days horizon Davis Financial Fund is expected to generate 0.58 times more return on investment than Franklin Gold. However, Davis Financial Fund is 1.71 times less risky than Franklin Gold. It trades about 0.14 of its potential returns per unit of risk. Franklin Gold And is currently generating about 0.07 per unit of risk. If you would invest 5,200 in Davis Financial Fund on August 31, 2024 and sell it today you would earn a total of 2,174 from holding Davis Financial Fund or generate 41.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Davis Financial Fund vs. Franklin Gold And
Performance |
| Timeline |
| Davis Financial |
| Franklin Gold And |
Davis Financial and Franklin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Financial and Franklin Gold
The main advantage of trading using opposite Davis Financial and Franklin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial 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.| Davis Financial vs. Vanguard Financials Index | Davis Financial vs. Regional Bank Fund | Davis Financial vs. Regional Bank Fund | Davis Financial vs. T Rowe Price |
| Franklin Gold vs. Mesirow Financial Small | Franklin Gold vs. Davis Financial Fund | Franklin Gold vs. Fidelity Advisor Financial | Franklin Gold vs. John Hancock Financial |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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