Correlation Between Gmo Global and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Franklin Federal 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 Gmo Global and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Global Equity and Franklin Federal Tax Free, you can compare the effects of market volatilities on Gmo Global and Franklin Federal 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 Gmo Global with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Franklin Federal.
Diversification Opportunities for Gmo Global and Franklin Federal
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gmo and Franklin is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax and Gmo Global 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 Gmo Global Equity are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Gmo Global i.e., Gmo Global and Franklin Federal go up and down completely randomly.
Pair Corralation between Gmo Global and Franklin Federal
Assuming the 90 days horizon Gmo Global Equity is expected to generate 2.62 times more return on investment than Franklin Federal. However, Gmo Global is 2.62 times more volatile than Franklin Federal Tax Free. It trades about 0.3 of its potential returns per unit of risk. Franklin Federal Tax Free is currently generating about -0.06 per unit of risk. If you would invest 2,824 in Gmo Global Equity on November 4, 2024 and sell it today you would earn a total of 110.00 from holding Gmo Global Equity or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Gmo Global Equity vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Gmo Global Equity |
| Franklin Federal Tax |
Gmo Global and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Franklin Federal
The main advantage of trading using opposite Gmo Global and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Franklin Federal 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 Franklin Federal will offset losses from the drop in Franklin Federal's long position.| Gmo Global vs. Commonwealth Global Fund | Gmo Global vs. Wisdomtree Siegel Global | Gmo Global vs. Qs Global Equity | Gmo Global vs. Scharf Global Opportunity |
| Franklin Federal vs. Msift High Yield | Franklin Federal vs. Pace High Yield | Franklin Federal vs. Buffalo High Yield | Franklin Federal vs. Multi Manager High Yield |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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