Correlation Between Franklin Federal and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Goldman Sachs 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 Federal and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Goldman Sachs Short Term, you can compare the effects of market volatilities on Franklin Federal and Goldman Sachs 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 Federal with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Goldman Sachs.
Diversification Opportunities for Franklin Federal and Goldman Sachs
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and GOLDMAN is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Goldman Sachs Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Short has no effect on the direction of Franklin Federal i.e., Franklin Federal and Goldman Sachs go up and down completely randomly.
Pair Corralation between Franklin Federal and Goldman Sachs
Assuming the 90 days horizon Franklin Federal is expected to generate 1.29 times less return on investment than Goldman Sachs. In addition to that, Franklin Federal is 1.04 times more volatile than Goldman Sachs Short Term. It trades about 0.16 of its total potential returns per unit of risk. Goldman Sachs Short Term is currently generating about 0.22 per unit of volatility. If you would invest 930.00 in Goldman Sachs Short Term on August 31, 2024 and sell it today you would earn a total of 80.00 from holding Goldman Sachs Short Term or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Goldman Sachs Short Term
Performance |
| Timeline |
| Franklin Federal Lim |
| Goldman Sachs Short |
Franklin Federal and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Goldman Sachs
The main advantage of trading using opposite Franklin Federal and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Franklin Federal vs. Pro Blend Moderate Term | Franklin Federal vs. Wisdomtree Siegel Moderate | Franklin Federal vs. Blackrock Moderate Prepared | Franklin Federal vs. Lifestyle Ii Moderate |
| Goldman Sachs vs. Virtus Global Real | Goldman Sachs vs. Allianzgi Mid Cap Fund | Goldman Sachs vs. Virtus Select Mlp | Goldman Sachs vs. Aquagold International |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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