Correlation Between Gmo International and Franklin Conservative
Can any of the company-specific risk be diversified away by investing in both Gmo International and Franklin Conservative 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 International and Franklin Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo International Equity and Franklin Servative Allocation, you can compare the effects of market volatilities on Gmo International and Franklin Conservative 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 International with a short position of Franklin Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo International and Franklin Conservative.
Diversification Opportunities for Gmo International and Franklin Conservative
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gmo and Franklin is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Gmo International Equity and Franklin Servative Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Conservative and Gmo International 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 International Equity are associated (or correlated) with Franklin Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Conservative has no effect on the direction of Gmo International i.e., Gmo International and Franklin Conservative go up and down completely randomly.
Pair Corralation between Gmo International and Franklin Conservative
Assuming the 90 days horizon Gmo International Equity is expected to generate 2.05 times more return on investment than Franklin Conservative. However, Gmo International is 2.05 times more volatile than Franklin Servative Allocation. It trades about 0.08 of its potential returns per unit of risk. Franklin Servative Allocation is currently generating about 0.09 per unit of risk. If you would invest 1,943 in Gmo International Equity on November 9, 2024 and sell it today you would earn a total of 694.00 from holding Gmo International Equity or generate 35.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo International Equity vs. Franklin Servative Allocation
Performance |
| Timeline |
| Gmo International Equity |
| Franklin Conservative |
Gmo International and Franklin Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo International and Franklin Conservative
The main advantage of trading using opposite Gmo International and Franklin Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo International position performs unexpectedly, Franklin Conservative 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 Conservative will offset losses from the drop in Franklin Conservative's long position.| Gmo International vs. Tax Managed Large Cap | Gmo International vs. Upright Assets Allocation | Gmo International vs. Growth Allocation Fund | Gmo International vs. Washington Mutual Investors |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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