Correlation Between Franklin Gold and American Funds
Can any of the company-specific risk be diversified away by investing in both Franklin Gold and American Funds 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 American Funds 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 American Funds Growth, you can compare the effects of market volatilities on Franklin Gold and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Gold and American Funds.
Diversification Opportunities for Franklin Gold and American Funds
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and American is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Gold Precious and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Growth has no effect on the direction of Franklin Gold i.e., Franklin Gold and American Funds go up and down completely randomly.
Pair Corralation between Franklin Gold and American Funds
Assuming the 90 days horizon Franklin Gold Precious is expected to under-perform the American Funds. In addition to that, Franklin Gold is 2.25 times more volatile than American Funds Growth. It trades about -0.01 of its total potential returns per unit of risk. American Funds Growth is currently generating about 0.12 per unit of volatility. If you would invest 2,585 in American Funds Growth on August 29, 2024 and sell it today you would earn a total of 168.00 from holding American Funds Growth or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Gold Precious vs. American Funds Growth
Performance |
| Timeline |
| Franklin Gold Precious |
| American Funds Growth |
Franklin Gold and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Gold and American Funds
The main advantage of trading using opposite Franklin Gold and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Gold position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Franklin Gold vs. First Eagle Gold | Franklin Gold vs. First Eagle Gold | Franklin Gold vs. Oppenheimer Gold Special | Franklin Gold vs. Aquagold International |
| American Funds vs. Pace Large Growth | American Funds vs. Vanguard Equity Income | American Funds vs. Strategic Allocation Aggressive | American Funds vs. Aqr Large Cap |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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