Correlation Between Franklin Government and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Franklin Government and Goldman Sachs 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 Government and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Government Securities and Goldman Sachs Government, you can compare the effects of market volatilities on Franklin Government and Goldman Sachs 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 Government with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and Goldman Sachs.
Diversification Opportunities for Franklin Government and Goldman Sachs
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and GOLDMAN is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Securities and Goldman Sachs Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Government and Franklin Government 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 Government Securities are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Government has no effect on the direction of Franklin Government i.e., Franklin Government and Goldman Sachs go up and down completely randomly.
Pair Corralation between Franklin Government and Goldman Sachs
Assuming the 90 days horizon Franklin Government Securities is expected to generate 0.89 times more return on investment than Goldman Sachs. However, Franklin Government Securities is 1.12 times less risky than Goldman Sachs. It trades about 0.13 of its potential returns per unit of risk. Goldman Sachs Government is currently generating about 0.1 per unit of risk. If you would invest 506.00 in Franklin Government Securities on September 1, 2024 and sell it today you would earn a total of 5.00 from holding Franklin Government Securities or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Government Securities vs. Goldman Sachs Government
Performance |
| Timeline |
| Franklin Government |
| Goldman Sachs Government |
Franklin Government and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Government and Goldman Sachs
The main advantage of trading using opposite Franklin Government and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Franklin Government vs. Short Term Government Fund | Franklin Government vs. Dunham Porategovernment Bond | Franklin Government vs. Fidelity Series Government | Franklin Government vs. Lord Abbett Government |
| Goldman Sachs vs. Government Securities Fund | Goldman Sachs vs. John Hancock Government | Goldman Sachs vs. Short Term Government Fund | Goldman Sachs vs. Blackrock Government Bond |
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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