Correlation Between Franklin Gold and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Franklin Gold and Vanguard Small-cap 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 Vanguard Small-cap 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 Vanguard Small Cap Index, you can compare the effects of market volatilities on Franklin Gold and Vanguard Small-cap 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 Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Gold and Vanguard Small-cap.
Diversification Opportunities for Franklin Gold and Vanguard Small-cap
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Vanguard is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Gold Precious and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap 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 Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Franklin Gold i.e., Franklin Gold and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Franklin Gold and Vanguard Small-cap
Assuming the 90 days horizon Franklin Gold is expected to generate 1.13 times less return on investment than Vanguard Small-cap. In addition to that, Franklin Gold is 1.49 times more volatile than Vanguard Small Cap Index. It trades about 0.04 of its total potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.07 per unit of volatility. If you would invest 25,646 in Vanguard Small Cap Index on September 3, 2024 and sell it today you would earn a total of 10,359 from holding Vanguard Small Cap Index or generate 40.39% 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. Vanguard Small Cap Index
Performance |
| Timeline |
| Franklin Gold Precious |
| Vanguard Small Cap |
Franklin Gold and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Gold and Vanguard Small-cap
The main advantage of trading using opposite Franklin Gold and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Gold position performs unexpectedly, Vanguard Small-cap 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 Vanguard Small-cap will offset losses from the drop in Vanguard Small-cap'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 |
| Vanguard Small-cap vs. Gabelli Gold Fund | Vanguard Small-cap vs. Franklin Gold Precious | Vanguard Small-cap vs. Global Gold Fund | Vanguard Small-cap vs. Invesco Gold Special |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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