Correlation Between Gmo Core and Franklin Corefolio

Can any of the company-specific risk be diversified away by investing in both Gmo Core and Franklin Corefolio 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 Gmo Core and Franklin Corefolio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gmo E Plus and Franklin Efolio Allocation, you can compare the effects of market volatilities on Gmo Core and Franklin Corefolio 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 Gmo Core with a short position of Franklin Corefolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Core and Franklin Corefolio.

Diversification Opportunities for Gmo Core and Franklin Corefolio

-0.62

Correlation Coefficient

Gmo Core  Franklin Corefolio

Excellent diversification

The 3 months correlation between Gmo and Franklin is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gmo E Plus and Franklin Efolio Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Efolio Allo and Gmo Core 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 Gmo E Plus are associated (or correlated) with Franklin Corefolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Efolio Allo has no effect on the direction of Gmo Core i.e., Gmo Core and Franklin Corefolio go up and down completely randomly.

Pair Corralation between Gmo Core and Franklin Corefolio

Assuming the 90 days horizon Gmo E Plus is expected to under-perform the Franklin Corefolio. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gmo E Plus is 2.37 times less risky than Franklin Corefolio. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Franklin Efolio Allocation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,210  in Franklin Efolio Allocation on September 4, 2024 and sell it today you would earn a total of  152.00  from holding Franklin Efolio Allocation or generate 6.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Gmo E Plus  vs.  Franklin Efolio Allocation

Gmo E Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo E Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Gmo Core is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Franklin Efolio Allo

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Efolio Allocation are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Franklin Corefolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gmo Core and Franklin Corefolio

The main advantage of trading using opposite Gmo Core and Franklin Corefolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Core position performs unexpectedly, Franklin Corefolio 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 Corefolio will offset losses from the drop in Franklin Corefolio's long position.

The idea behind Gmo E Plus and Franklin Efolio Allocation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.