Correlation Between New World and Franklin Gold
Can any of the company-specific risk be diversified away by investing in both New World and Franklin Gold 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 New World and Franklin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New World Fund and Franklin Gold Precious, you can compare the effects of market volatilities on New World and Franklin Gold 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 New World with a short position of Franklin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Franklin Gold.
Diversification Opportunities for New World and Franklin Gold
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Franklin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Franklin Gold Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Gold Precious and New World 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 New World Fund are associated (or correlated) with Franklin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Gold Precious has no effect on the direction of New World i.e., New World and Franklin Gold go up and down completely randomly.
Pair Corralation between New World and Franklin Gold
Assuming the 90 days horizon New World is expected to generate 2.09 times less return on investment than Franklin Gold. But when comparing it to its historical volatility, New World Fund is 2.4 times less risky than Franklin Gold. It trades about 0.11 of its potential returns per unit of risk. Franklin Gold Precious is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,628 in Franklin Gold Precious on September 5, 2024 and sell it today you would earn a total of 229.00 from holding Franklin Gold Precious or generate 14.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Franklin Gold Precious
Performance |
| Timeline |
| New World Fund |
| Franklin Gold Precious |
New World and Franklin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Franklin Gold
The main advantage of trading using opposite New World and Franklin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Franklin Gold 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 Gold will offset losses from the drop in Franklin Gold's long position.| New World vs. Franklin Gold Precious | New World vs. First Eagle Gold | New World vs. Global Gold Fund | New World vs. Goldman Sachs Short |
| Franklin Gold vs. Aqr Large Cap | Franklin Gold vs. Americafirst Large Cap | Franklin Gold vs. Avantis Large Cap | Franklin Gold vs. Qs Large Cap |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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