Correlation Between Franklin Gold and Lifestyle
Can any of the company-specific risk be diversified away by investing in both Franklin Gold and Lifestyle 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 Lifestyle 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 Lifestyle Ii Growth, you can compare the effects of market volatilities on Franklin Gold and Lifestyle 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 Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Gold and Lifestyle.
Diversification Opportunities for Franklin Gold and Lifestyle
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Lifestyle is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Gold Precious and Lifestyle Ii Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Ii 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 Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Ii Growth has no effect on the direction of Franklin Gold i.e., Franklin Gold and Lifestyle go up and down completely randomly.
Pair Corralation between Franklin Gold and Lifestyle
Assuming the 90 days horizon Franklin Gold Precious is expected to generate 2.6 times more return on investment than Lifestyle. However, Franklin Gold is 2.6 times more volatile than Lifestyle Ii Growth. It trades about 0.06 of its potential returns per unit of risk. Lifestyle Ii Growth is currently generating about 0.08 per unit of risk. If you would invest 1,223 in Franklin Gold Precious on November 9, 2024 and sell it today you would earn a total of 606.00 from holding Franklin Gold Precious or generate 49.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Gold Precious vs. Lifestyle Ii Growth
Performance |
| Timeline |
| Franklin Gold Precious |
| Lifestyle Ii Growth |
Franklin Gold and Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Gold and Lifestyle
The main advantage of trading using opposite Franklin Gold and Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Gold position performs unexpectedly, Lifestyle 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 Lifestyle will offset losses from the drop in Lifestyle's long position.| Franklin Gold vs. Goldman Sachs Clean | Franklin Gold vs. Gabelli Gold Fund | Franklin Gold vs. Precious Metals And | Franklin Gold vs. James Balanced Golden |
| Lifestyle vs. Ab Bond Inflation | Lifestyle vs. Nuveen Strategic Municipal | Lifestyle vs. Morningstar Defensive Bond | Lifestyle vs. Artisan High Income |
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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