Correlation Between Guidemark and Franklin Equity
Can any of the company-specific risk be diversified away by investing in both Guidemark and Franklin Equity 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 Guidemark and Franklin Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidemark E Fixed and Franklin Equity Income, you can compare the effects of market volatilities on Guidemark and Franklin Equity 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 Guidemark with a short position of Franklin Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark and Franklin Equity.
Diversification Opportunities for Guidemark and Franklin Equity
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guidemark and Franklin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark E Fixed and Franklin Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Equity Income and Guidemark 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 Guidemark E Fixed are associated (or correlated) with Franklin Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Equity Income has no effect on the direction of Guidemark i.e., Guidemark and Franklin Equity go up and down completely randomly.
Pair Corralation between Guidemark and Franklin Equity
Assuming the 90 days horizon Guidemark E Fixed is expected to generate 0.2 times more return on investment than Franklin Equity. However, Guidemark E Fixed is 5.1 times less risky than Franklin Equity. It trades about -0.5 of its potential returns per unit of risk. Franklin Equity Income is currently generating about -0.32 per unit of risk. If you would invest 832.00 in Guidemark E Fixed on October 11, 2024 and sell it today you would lose (27.00) from holding Guidemark E Fixed or give up 3.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidemark E Fixed vs. Franklin Equity Income
Performance |
| Timeline |
| Guidemark E Fixed |
| Franklin Equity Income |
Guidemark and Franklin Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidemark and Franklin Equity
The main advantage of trading using opposite Guidemark and Franklin Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark position performs unexpectedly, Franklin Equity 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 Equity will offset losses from the drop in Franklin Equity's long position.| Guidemark vs. Quantitative Longshort Equity | Guidemark vs. Greenspring Fund Retail | Guidemark vs. Ab Equity Income | Guidemark vs. Smallcap World Fund |
| Franklin Equity vs. Precious Metals And | Franklin Equity vs. James Balanced Golden | Franklin Equity vs. Vy Goldman Sachs | Franklin Equity vs. Short Precious Metals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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