Correlation Between Franklin Gold and Western Asset
Can any of the company-specific risk be diversified away by investing in both Franklin Gold and Western Asset 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 Western Asset 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 Western Asset Porate, you can compare the effects of market volatilities on Franklin Gold and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Gold and Western Asset.
Diversification Opportunities for Franklin Gold and Western Asset
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Western is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Gold Precious and Western Asset Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Porate 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Porate has no effect on the direction of Franklin Gold i.e., Franklin Gold and Western Asset go up and down completely randomly.
Pair Corralation between Franklin Gold and Western Asset
Assuming the 90 days horizon Franklin Gold Precious is expected to generate 3.84 times more return on investment than Western Asset. However, Franklin Gold is 3.84 times more volatile than Western Asset Porate. It trades about 0.06 of its potential returns per unit of risk. Western Asset Porate is currently generating about 0.04 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Gold Precious vs. Western Asset Porate
Performance |
| Timeline |
| Franklin Gold Precious |
| Western Asset Porate |
Franklin Gold and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Gold and Western Asset
The main advantage of trading using opposite Franklin Gold and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Gold position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Great West Loomis Sayles | Western Asset vs. Palm Valley Capital | Western Asset vs. Vanguard Small Cap Value | Western Asset vs. Ab Small 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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