Correlation Between Gamco Natural and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Gamco Natural and Franklin Federal 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 Gamco Natural and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamco Natural Resources and Franklin Federal Tax Free, you can compare the effects of market volatilities on Gamco Natural and Franklin Federal 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 Gamco Natural with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Natural and Franklin Federal.
Diversification Opportunities for Gamco Natural and Franklin Federal
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gamco and Franklin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax and Gamco Natural 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 Gamco Natural Resources are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Gamco Natural i.e., Gamco Natural and Franklin Federal go up and down completely randomly.
Pair Corralation between Gamco Natural and Franklin Federal
Assuming the 90 days horizon Gamco Natural Resources is expected to under-perform the Franklin Federal. In addition to that, Gamco Natural is 2.45 times more volatile than Franklin Federal Tax Free. It trades about -0.11 of its total potential returns per unit of risk. Franklin Federal Tax Free is currently generating about 0.19 per unit of volatility. If you would invest 1,088 in Franklin Federal Tax Free on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Franklin Federal Tax Free or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamco Natural Resources vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Gamco Natural Resources |
| Franklin Federal Tax |
Gamco Natural and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamco Natural and Franklin Federal
The main advantage of trading using opposite Gamco Natural and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Natural position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Gamco Natural vs. Vanguard Total Stock | Gamco Natural vs. Vanguard 500 Index | Gamco Natural vs. Vanguard Total Stock | Gamco Natural vs. Vanguard Total Stock |
| Franklin Federal vs. Icon Financial Fund | Franklin Federal vs. Fidelity Advisor Financial | Franklin Federal vs. Prudential Jennison Financial | Franklin Federal vs. Davis Financial Fund |
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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