Correlation Between Gmo High and Franklin California
Can any of the company-specific risk be diversified away by investing in both Gmo High and Franklin California 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 High and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Franklin California High, you can compare the effects of market volatilities on Gmo High and Franklin California 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 High with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Franklin California.
Diversification Opportunities for Gmo High and Franklin California
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gmo and Franklin is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Franklin California High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California High and Gmo High 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 High Yield are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California High has no effect on the direction of Gmo High i.e., Gmo High and Franklin California go up and down completely randomly.
Pair Corralation between Gmo High and Franklin California
Assuming the 90 days horizon Gmo High is expected to generate 1.29 times less return on investment than Franklin California. But when comparing it to its historical volatility, Gmo High Yield is 1.33 times less risky than Franklin California. It trades about 0.14 of its potential returns per unit of risk. Franklin California High is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 980.00 in Franklin California High on November 27, 2024 and sell it today you would earn a total of 6.00 from holding Franklin California High or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Franklin California High
Performance |
| Timeline |
| Gmo High Yield |
| Franklin California High |
Gmo High and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Franklin California
The main advantage of trading using opposite Gmo High and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Franklin California 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 California will offset losses from the drop in Franklin California's long position.| Gmo High vs. Glg Intl Small | Gmo High vs. Ab Small Cap | Gmo High vs. Needham Small Cap | Gmo High vs. Legg Mason Partners |
| Franklin California vs. Franklin Mutual Beacon | Franklin California vs. Templeton Developing Markets | Franklin California vs. Franklin Mutual Global | Franklin California 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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