Correlation Between Goldman Sachs and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Franklin Mutual 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 Goldman Sachs and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Equity and Franklin Mutual Beacon, you can compare the effects of market volatilities on Goldman Sachs and Franklin Mutual 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 Goldman Sachs with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Franklin Mutual.
Diversification Opportunities for Goldman Sachs and Franklin Mutual
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and Franklin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Equity and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon and Goldman Sachs 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 Goldman Sachs Equity are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Franklin Mutual go up and down completely randomly.
Pair Corralation between Goldman Sachs and Franklin Mutual
Assuming the 90 days horizon Goldman Sachs Equity is expected to generate 0.91 times more return on investment than Franklin Mutual. However, Goldman Sachs Equity is 1.1 times less risky than Franklin Mutual. It trades about 0.12 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.07 per unit of risk. If you would invest 1,511 in Goldman Sachs Equity on September 3, 2024 and sell it today you would earn a total of 312.00 from holding Goldman Sachs Equity or generate 20.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Equity vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Goldman Sachs Equity |
| Franklin Mutual Beacon |
Goldman Sachs and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Franklin Mutual
The main advantage of trading using opposite Goldman Sachs and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Goldman Sachs vs. Shelton Emerging Markets | Goldman Sachs vs. Artisan Emerging Markets | Goldman Sachs vs. Calamos Market Neutral | Goldman Sachs vs. Oklahoma College Savings |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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