Correlation Between Franklin International and Gamco Global
Can any of the company-specific risk be diversified away by investing in both Franklin International and Gamco Global 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 Franklin International and Gamco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin International Small and The Gamco Global, you can compare the effects of market volatilities on Franklin International and Gamco Global 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 Franklin International with a short position of Gamco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin International and Gamco Global.
Diversification Opportunities for Franklin International and Gamco Global
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Gamco is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Franklin International Small and The Gamco Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Global and Franklin International 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 Franklin International Small are associated (or correlated) with Gamco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco Global has no effect on the direction of Franklin International i.e., Franklin International and Gamco Global go up and down completely randomly.
Pair Corralation between Franklin International and Gamco Global
If you would invest 2,554 in The Gamco Global on September 1, 2024 and sell it today you would earn a total of 122.00 from holding The Gamco Global or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
Franklin International Small vs. The Gamco Global
Performance |
| Timeline |
| Franklin International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Gamco Global |
Franklin International and Gamco Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin International and Gamco Global
The main advantage of trading using opposite Franklin International and Gamco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin International position performs unexpectedly, Gamco Global 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 Gamco Global will offset losses from the drop in Gamco Global's long position.The idea behind Franklin International Small and The Gamco Global 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.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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