Correlation Between GM and Franklin Focused
Can any of the company-specific risk be diversified away by investing in both GM and Franklin Focused 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 GM and Franklin Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Franklin Focused Growth, you can compare the effects of market volatilities on GM and Franklin Focused 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 GM with a short position of Franklin Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Franklin Focused.
Diversification Opportunities for GM and Franklin Focused
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Franklin is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Franklin Focused Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Focused Growth and GM 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 General Motors are associated (or correlated) with Franklin Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Focused Growth has no effect on the direction of GM i.e., GM and Franklin Focused go up and down completely randomly.
Pair Corralation between GM and Franklin Focused
Allowing for the 90-day total investment horizon GM is expected to generate 2.89 times less return on investment than Franklin Focused. In addition to that, GM is 1.56 times more volatile than Franklin Focused Growth. It trades about 0.03 of its total potential returns per unit of risk. Franklin Focused Growth is currently generating about 0.12 per unit of volatility. If you would invest 2,572 in Franklin Focused Growth on November 9, 2024 and sell it today you would earn a total of 1,600 from holding Franklin Focused Growth or generate 62.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 63.69% |
| Values | Daily Returns |
General Motors vs. Franklin Focused Growth
Performance |
| Timeline |
| General Motors |
| Franklin Focused Growth |
GM and Franklin Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Franklin Focused
The main advantage of trading using opposite GM and Franklin Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Franklin Focused 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 Focused will offset losses from the drop in Franklin Focused's long position.The idea behind General Motors and Franklin Focused Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Franklin Focused vs. Davis Select International | Franklin Focused vs. Tidal ETF Trust | Franklin Focused vs. Principal Value ETF | Franklin Focused vs. WisdomTree Emerging Markets |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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