Correlation Between Precious Metals and Franklin Gold
Can any of the company-specific risk be diversified away by investing in both Precious Metals 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 Precious Metals and Franklin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precious Metals Ultrasector and Franklin Gold Precious, you can compare the effects of market volatilities on Precious Metals 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 Precious Metals with a short position of Franklin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and Franklin Gold.
Diversification Opportunities for Precious Metals and Franklin Gold
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Precious and Franklin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals Ultrasector 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 Precious Metals 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 Precious Metals Ultrasector 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 Precious Metals i.e., Precious Metals and Franklin Gold go up and down completely randomly.
Pair Corralation between Precious Metals and Franklin Gold
Assuming the 90 days horizon Precious Metals Ultrasector is expected to generate 1.6 times more return on investment than Franklin Gold. However, Precious Metals is 1.6 times more volatile than Franklin Gold Precious. It trades about -0.16 of its potential returns per unit of risk. Franklin Gold Precious is currently generating about -0.28 per unit of risk. If you would invest 5,234 in Precious Metals Ultrasector on August 27, 2024 and sell it today you would lose (604.00) from holding Precious Metals Ultrasector or give up 11.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precious Metals Ultrasector vs. Franklin Gold Precious
Performance |
| Timeline |
| Precious Metals Ultr |
| Franklin Gold Precious |
Precious Metals and Franklin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and Franklin Gold
The main advantage of trading using opposite Precious Metals and Franklin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals 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.| Precious Metals vs. Internet Ultrasector Profund | Precious Metals vs. Semiconductor Ultrasector Profund | Precious Metals vs. Technology Ultrasector Profund |
| Franklin Gold vs. Franklin Mutual Beacon | Franklin Gold vs. Templeton Developing Markets | Franklin Gold vs. Franklin Mutual Global | Franklin Gold 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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