Correlation Between Goldman Sachs and Franklin New
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Franklin New 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 Goldman Sachs and Franklin New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Technology and Franklin New York, you can compare the effects of market volatilities on Goldman Sachs and Franklin New 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 Goldman Sachs with a short position of Franklin New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Franklin New.
Diversification Opportunities for Goldman Sachs and Franklin New
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and Franklin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York and Goldman Sachs 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 Goldman Sachs Technology are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Franklin New go up and down completely randomly.
Pair Corralation between Goldman Sachs and Franklin New
Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 7.73 times more return on investment than Franklin New. However, Goldman Sachs is 7.73 times more volatile than Franklin New York. It trades about 0.1 of its potential returns per unit of risk. Franklin New York is currently generating about 0.07 per unit of risk. If you would invest 3,613 in Goldman Sachs Technology on October 25, 2024 and sell it today you would earn a total of 76.00 from holding Goldman Sachs Technology or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Technology vs. Franklin New York
Performance |
| Timeline |
| Goldman Sachs Technology |
| Franklin New York |
Goldman Sachs and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Franklin New
The main advantage of trading using opposite Goldman Sachs and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New's long position.| Goldman Sachs vs. Qs Small Capitalization | Goldman Sachs vs. Rational Dividend Capture | Goldman Sachs vs. Small Midcap Dividend Income | Goldman Sachs vs. Shelton E Value |
| Franklin New vs. Wells Fargo Diversified | Franklin New vs. Madison Diversified Income | Franklin New vs. Stone Ridge Diversified | Franklin New vs. Aqr Diversified Arbitrage |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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