Correlation Between Franklin Natural and Gmo Resources
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Gmo Resources 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 Natural and Gmo Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Natural Resources and Gmo Resources, you can compare the effects of market volatilities on Franklin Natural and Gmo Resources 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 Natural with a short position of Gmo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Gmo Resources.
Diversification Opportunities for Franklin Natural and Gmo Resources
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FRANKLIN and Gmo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Gmo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Resources and Franklin Natural 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 Natural Resources are associated (or correlated) with Gmo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Resources has no effect on the direction of Franklin Natural i.e., Franklin Natural and Gmo Resources go up and down completely randomly.
Pair Corralation between Franklin Natural and Gmo Resources
Assuming the 90 days horizon Franklin Natural Resources is expected to generate 0.78 times more return on investment than Gmo Resources. However, Franklin Natural Resources is 1.28 times less risky than Gmo Resources. It trades about 0.07 of its potential returns per unit of risk. Gmo Resources is currently generating about 0.0 per unit of risk. If you would invest 2,829 in Franklin Natural Resources on August 27, 2024 and sell it today you would earn a total of 386.00 from holding Franklin Natural Resources or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Gmo Resources
Performance |
| Timeline |
| Franklin Natural Res |
| Gmo Resources |
Franklin Natural and Gmo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Gmo Resources
The main advantage of trading using opposite Franklin Natural and Gmo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Gmo Resources 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 Gmo Resources will offset losses from the drop in Gmo Resources' long position.| Franklin Natural vs. Tekla Healthcare Opportunities | Franklin Natural vs. Blackrock Health Sciences | Franklin Natural vs. Invesco Global Health | Franklin Natural vs. Highland Longshort Healthcare |
| Gmo Resources vs. Ab Centrated Growth | Gmo Resources vs. Artisan Small Cap | Gmo Resources vs. Rational Defensive Growth | Gmo Resources vs. Praxis Growth Index |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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