Correlation Between The Gold and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both The Gold 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 The Gold and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gold Bullion and Franklin Mutual European, you can compare the effects of market volatilities on The Gold 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 The Gold with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gold and Franklin Mutual.
Diversification Opportunities for The Gold and Franklin Mutual
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between The and Franklin is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Franklin Mutual European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual European and The Gold 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 The Gold Bullion 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 European has no effect on the direction of The Gold i.e., The Gold and Franklin Mutual go up and down completely randomly.
Pair Corralation between The Gold and Franklin Mutual
Assuming the 90 days horizon The Gold Bullion is expected to generate 1.25 times more return on investment than Franklin Mutual. However, The Gold is 1.25 times more volatile than Franklin Mutual European. It trades about 0.12 of its potential returns per unit of risk. Franklin Mutual European is currently generating about 0.04 per unit of risk. If you would invest 1,565 in The Gold Bullion on October 20, 2024 and sell it today you would earn a total of 505.00 from holding The Gold Bullion or generate 32.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gold Bullion vs. Franklin Mutual European
Performance |
| Timeline |
| Gold Bullion |
| Franklin Mutual European |
The Gold and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Gold and Franklin Mutual
The main advantage of trading using opposite The Gold and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Gold 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.| The Gold vs. Smallcap World Fund | The Gold vs. Small Cap Equity | The Gold vs. Artisan Select Equity | The Gold vs. Dreyfusstandish Global Fixed |
| Franklin Mutual vs. Franklin Gold Precious | Franklin Mutual vs. Global Gold Fund | Franklin Mutual vs. The Gold Bullion | Franklin Mutual vs. Deutsche Gold Precious |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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