Correlation Between Franklin Gold and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Franklin Gold 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 Gold 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 Gold Precious and Goldman Sachs Short, you can compare the effects of market volatilities on Franklin Gold 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 Gold with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Gold and Goldman Sachs.
Diversification Opportunities for Franklin Gold and Goldman Sachs
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and GOLDMAN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Gold Precious and Goldman Sachs Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short 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 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 Short has no effect on the direction of Franklin Gold i.e., Franklin Gold and Goldman Sachs go up and down completely randomly.
Pair Corralation between Franklin Gold and Goldman Sachs
Assuming the 90 days horizon Franklin Gold Precious is expected to under-perform the Goldman Sachs. In addition to that, Franklin Gold is 27.14 times more volatile than Goldman Sachs Short. It trades about -0.16 of its total potential returns per unit of risk. Goldman Sachs Short is currently generating about 0.2 per unit of volatility. If you would invest 967.00 in Goldman Sachs Short on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Goldman Sachs Short or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Gold Precious vs. Goldman Sachs Short
Performance |
| Timeline |
| Franklin Gold Precious |
| Goldman Sachs Short |
Franklin Gold and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Gold and Goldman Sachs
The main advantage of trading using opposite Franklin Gold and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Gold 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 Gold vs. Rationalpier 88 Convertible | Franklin Gold vs. Gabelli Convertible And | Franklin Gold vs. Calamos Dynamic Convertible | Franklin Gold vs. Absolute Convertible Arbitrage |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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