Correlation Between Gmo Usonian and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Gmo Usonian 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 Usonian 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 Usonian Japan Value and Franklin Federal Limited Term, you can compare the effects of market volatilities on Gmo Usonian 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 Usonian with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Usonian and Franklin Federal.
Diversification Opportunities for Gmo Usonian and Franklin Federal
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gmo and Franklin is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Usonian Japan Value and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Gmo Usonian 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 Usonian Japan Value 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 Lim has no effect on the direction of Gmo Usonian i.e., Gmo Usonian and Franklin Federal go up and down completely randomly.
Pair Corralation between Gmo Usonian and Franklin Federal
Assuming the 90 days horizon Gmo Usonian Japan Value is expected to generate 22.93 times more return on investment than Franklin Federal. However, Gmo Usonian is 22.93 times more volatile than Franklin Federal Limited Term. It trades about 0.19 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.62 per unit of risk. If you would invest 1,993 in Gmo Usonian Japan Value on September 13, 2024 and sell it today you would earn a total of 83.00 from holding Gmo Usonian Japan Value or generate 4.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Usonian Japan Value vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Gmo Usonian Japan |
| Franklin Federal Lim |
Gmo Usonian and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Usonian and Franklin Federal
The main advantage of trading using opposite Gmo Usonian and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Usonian 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 Usonian vs. Gmo E Plus | Gmo Usonian vs. Gmo Trust | Gmo Usonian vs. Gmo Treasury Fund | Gmo Usonian vs. Gmo Trust |
| Franklin Federal vs. Franklin Mutual Beacon | Franklin Federal vs. Templeton Developing Markets | Franklin Federal vs. Franklin Mutual Global | Franklin Federal vs. Franklin Mutual Global |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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