Correlation Between Franklin Gold and Power Momentum
Can any of the company-specific risk be diversified away by investing in both Franklin Gold and Power Momentum 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 Power Momentum 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 Power Momentum Index, you can compare the effects of market volatilities on Franklin Gold and Power Momentum 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 Power Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Gold and Power Momentum.
Diversification Opportunities for Franklin Gold and Power Momentum
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Power is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Gold Precious and Power Momentum Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Momentum Index 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 Power Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Momentum Index has no effect on the direction of Franklin Gold i.e., Franklin Gold and Power Momentum go up and down completely randomly.
Pair Corralation between Franklin Gold and Power Momentum
Assuming the 90 days horizon Franklin Gold is expected to generate 1.17 times less return on investment than Power Momentum. In addition to that, Franklin Gold is 1.72 times more volatile than Power Momentum Index. It trades about 0.04 of its total potential returns per unit of risk. Power Momentum Index is currently generating about 0.08 per unit of volatility. If you would invest 991.00 in Power Momentum Index on September 3, 2024 and sell it today you would earn a total of 426.00 from holding Power Momentum Index or generate 42.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Gold Precious vs. Power Momentum Index
Performance |
| Timeline |
| Franklin Gold Precious |
| Power Momentum Index |
Franklin Gold and Power Momentum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Gold and Power Momentum
The main advantage of trading using opposite Franklin Gold and Power Momentum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Gold position performs unexpectedly, Power Momentum 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 Power Momentum will offset losses from the drop in Power Momentum'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 |
| Power Momentum vs. Goldman Sachs Short | Power Momentum vs. Franklin Gold Precious | Power Momentum vs. Gold And Precious | Power Momentum vs. International Investors Gold |
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 CEOs Directory module to screen CEOs from public companies around the world.
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