Correlation Between Franklin California and Gmo High
Can any of the company-specific risk be diversified away by investing in both Franklin California and Gmo High 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 California and Gmo High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin California High and Gmo High Yield, you can compare the effects of market volatilities on Franklin California and Gmo High 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 California with a short position of Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin California and Gmo High.
Diversification Opportunities for Franklin California and Gmo High
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Gmo is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Franklin California High and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield and Franklin California 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 California High are associated (or correlated) with Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Franklin California i.e., Franklin California and Gmo High go up and down completely randomly.
Pair Corralation between Franklin California and Gmo High
Assuming the 90 days horizon Franklin California High is expected to under-perform the Gmo High. In addition to that, Franklin California is 1.59 times more volatile than Gmo High Yield. It trades about -0.04 of its total potential returns per unit of risk. Gmo High Yield is currently generating about 0.02 per unit of volatility. If you would invest 1,798 in Gmo High Yield on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Gmo High Yield or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin California High vs. Gmo High Yield
Performance |
| Timeline |
| Franklin California High |
| Gmo High Yield |
Franklin California and Gmo High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin California and Gmo High
The main advantage of trading using opposite Franklin California and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin California position performs unexpectedly, Gmo High 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 High will offset losses from the drop in Gmo High's long position.| Franklin California vs. Gmo High Yield | Franklin California vs. Lord Abbett High | Franklin California vs. Victory High Yield | Franklin California vs. Artisan High Income |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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