Correlation Between Franklin Gold and Madison Core
Can any of the company-specific risk be diversified away by investing in both Franklin Gold and Madison Core 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 Madison Core 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 Madison E Bond, you can compare the effects of market volatilities on Franklin Gold and Madison Core 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 Madison Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Gold and Madison Core.
Diversification Opportunities for Franklin Gold and Madison Core
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Madison is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Gold Precious and Madison E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison E Bond 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 Madison Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison E Bond has no effect on the direction of Franklin Gold i.e., Franklin Gold and Madison Core go up and down completely randomly.
Pair Corralation between Franklin Gold and Madison Core
Assuming the 90 days horizon Franklin Gold Precious is expected to under-perform the Madison Core. In addition to that, Franklin Gold is 5.83 times more volatile than Madison E Bond. It trades about -0.03 of its total potential returns per unit of risk. Madison E Bond is currently generating about -0.11 per unit of volatility. If you would invest 922.00 in Madison E Bond on September 3, 2024 and sell it today you would lose (13.00) from holding Madison E Bond or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Gold Precious vs. Madison E Bond
Performance |
| Timeline |
| Franklin Gold Precious |
| Madison E Bond |
Franklin Gold and Madison Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Gold and Madison Core
The main advantage of trading using opposite Franklin Gold and Madison Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Gold position performs unexpectedly, Madison Core 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 Madison Core will offset losses from the drop in Madison Core's 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 |
| Madison Core vs. Massmutual Premier Diversified | Madison Core vs. Northern Small Cap | Madison Core vs. Delaware Limited Term Diversified | Madison Core vs. Pgim Jennison Diversified |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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