Correlation Between Goldman Sachs and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs 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 Goldman Sachs and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Financial and Franklin Mutual Global, you can compare the effects of market volatilities on Goldman Sachs 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 Goldman Sachs with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Franklin Mutual.
Diversification Opportunities for Goldman Sachs and Franklin Mutual
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Goldman and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Financial and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global and Goldman Sachs 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 Goldman Sachs Financial 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 Global has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Franklin Mutual go up and down completely randomly.
Pair Corralation between Goldman Sachs and Franklin Mutual
Assuming the 90 days horizon Goldman Sachs Financial is expected to generate 25.41 times more return on investment than Franklin Mutual. However, Goldman Sachs is 25.41 times more volatile than Franklin Mutual Global. It trades about 0.04 of its potential returns per unit of risk. Franklin Mutual Global is currently generating about 0.01 per unit of risk. If you would invest 396.00 in Goldman Sachs Financial on September 26, 2024 and sell it today you would lose (296.00) from holding Goldman Sachs Financial or give up 74.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 98.22% |
Values | Daily Returns |
Goldman Sachs Financial vs. Franklin Mutual Global
Performance |
Timeline |
Goldman Sachs Financial |
Franklin Mutual Global |
Goldman Sachs and Franklin Mutual Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Goldman Sachs and Franklin Mutual
The main advantage of trading using opposite Goldman Sachs and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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.Goldman Sachs vs. Vanguard Total Stock | Goldman Sachs vs. Vanguard 500 Index | Goldman Sachs vs. Vanguard Total Stock | Goldman Sachs vs. Vanguard Total Stock |
Franklin Mutual vs. Goldman Sachs Financial | Franklin Mutual vs. Davis Financial Fund | Franklin Mutual vs. Gabelli Global Financial | Franklin Mutual vs. Mesirow Financial Small |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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