Correlation Between Franklin Gold and Gold
Can any of the company-specific risk be diversified away by investing in both Franklin Gold and 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 Gold and Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Gold Precious and Gold And Precious, you can compare the effects of market volatilities on Franklin Gold and 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 Gold with a short position of Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Gold and Gold.
Diversification Opportunities for Franklin Gold and Gold
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and Gold is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Gold Precious and Gold And Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Precious and Franklin Gold 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 Gold Precious are associated (or correlated) with Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Precious has no effect on the direction of Franklin Gold i.e., Franklin Gold and Gold go up and down completely randomly.
Pair Corralation between Franklin Gold and Gold
Assuming the 90 days horizon Franklin Gold is expected to generate 1.07 times less return on investment than Gold. In addition to that, Franklin Gold is 1.02 times more volatile than Gold And Precious. It trades about 0.03 of its total potential returns per unit of risk. Gold And Precious is currently generating about 0.03 per unit of volatility. If you would invest 1,036 in Gold And Precious on August 31, 2024 and sell it today you would earn a total of 219.00 from holding Gold And Precious or generate 21.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Gold Precious vs. Gold And Precious
Performance |
| Timeline |
| Franklin Gold Precious |
| Gold And Precious |
Franklin Gold and Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Gold and Gold
The main advantage of trading using opposite Franklin Gold and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Gold position performs unexpectedly, 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 Gold will offset losses from the drop in Gold's long position.| Franklin Gold vs. First Eagle Gold | Franklin Gold vs. First Eagle Gold | Franklin Gold vs. First Eagle Gold | Franklin Gold vs. Oppenheimer Gold Special |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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