Correlation Between Great-west Moderately and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Great-west Moderately and Franklin Natural 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 Great-west Moderately and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Moderately Aggressive and Franklin Natural Resources, you can compare the effects of market volatilities on Great-west Moderately and Franklin Natural 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 Great-west Moderately with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Moderately and Franklin Natural.
Diversification Opportunities for Great-west Moderately and Franklin Natural
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great-west and Franklin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Great West Moderately Aggressi and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res and Great-west Moderately 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 Great West Moderately Aggressive are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Great-west Moderately i.e., Great-west Moderately and Franklin Natural go up and down completely randomly.
Pair Corralation between Great-west Moderately and Franklin Natural
Assuming the 90 days horizon Great West Moderately Aggressive is expected to under-perform the Franklin Natural. But the mutual fund apears to be less risky and, when comparing its historical volatility, Great West Moderately Aggressive is 1.86 times less risky than Franklin Natural. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Franklin Natural Resources is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,068 in Franklin Natural Resources on October 19, 2024 and sell it today you would lose (24.00) from holding Franklin Natural Resources or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Moderately Aggressi vs. Franklin Natural Resources
Performance |
| Timeline |
| Great West Moderately |
| Franklin Natural Res |
Great-west Moderately and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Moderately and Franklin Natural
The main advantage of trading using opposite Great-west Moderately and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Moderately position performs unexpectedly, Franklin Natural 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 Natural will offset losses from the drop in Franklin Natural's long position.| Great-west Moderately vs. Volumetric Fund Volumetric | Great-west Moderately vs. Eip Growth And | Great-west Moderately vs. Ips Strategic Capital | Great-west Moderately vs. Ab New York |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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