Correlation Between Franklin Credit and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Franklin Credit and Eldorado 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 Franklin Credit and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Credit Management and Eldorado Gold Corp, you can compare the effects of market volatilities on Franklin Credit and Eldorado 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 Franklin Credit with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Credit and Eldorado Gold.
Diversification Opportunities for Franklin Credit and Eldorado Gold
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Eldorado is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Credit Management and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp and Franklin Credit 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 Credit Management are associated (or correlated) with Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Franklin Credit i.e., Franklin Credit and Eldorado Gold go up and down completely randomly.
Pair Corralation between Franklin Credit and Eldorado Gold
Given the investment horizon of 90 days Franklin Credit Management is expected to generate 4.75 times more return on investment than Eldorado Gold. However, Franklin Credit is 4.75 times more volatile than Eldorado Gold Corp. It trades about 0.04 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.08 per unit of risk. If you would invest 12.00 in Franklin Credit Management on August 25, 2024 and sell it today you would lose (1.00) from holding Franklin Credit Management or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Credit Management vs. Eldorado Gold Corp
Performance |
| Timeline |
| Franklin Credit Mana |
| Eldorado Gold Corp |
Franklin Credit and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Credit and Eldorado Gold
The main advantage of trading using opposite Franklin Credit and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Credit position performs unexpectedly, Eldorado 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 Eldorado Gold will offset losses from the drop in Eldorado Gold's long position.| Franklin Credit vs. Invesco High Income | Franklin Credit vs. Blackrock Muniholdings Ny | Franklin Credit vs. MFS Investment Grade | Franklin Credit vs. Federated Premier Municipal |
| Eldorado Gold vs. Fortitude Gold Corp | Eldorado Gold vs. New Gold | Eldorado Gold vs. Galiano Gold | Eldorado Gold vs. GoldMining |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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