Correlation Between Great West and Franklin Total

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

By analyzing existing cross correlation between Great West Goldman Sachs and Franklin Total Return, you can compare the effects of market volatilities on Great West and Franklin Total 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 Great West with a short position of Franklin Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Franklin Total.

Diversification Opportunities for Great West and Franklin Total

-0.46

Correlation Coefficient

Great West  Franklin Total

Very good diversification

The 3 months correlation between Great and Franklin is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Great West Goldman Sachs and Franklin Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Total Return and Great West 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 Great West Goldman Sachs are associated (or correlated) with Franklin Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Total Return has no effect on the direction of Great West i.e., Great West and Franklin Total go up and down completely randomly.

Pair Corralation between Great West and Franklin Total

Assuming the 90 days horizon Great West is expected to generate 1.29 times less return on investment than Franklin Total. In addition to that, Great West is 2.45 times more volatile than Franklin Total Return. It trades about 0.06 of its total potential returns per unit of risk. Franklin Total Return is currently generating about 0.2 per unit of volatility. If you would invest  831.00  in Franklin Total Return on September 14, 2024 and sell it today you would earn a total of  9.00  from holding Franklin Total Return or generate 1.08% return on investment over 90 days.

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

Great West Goldman Sachs  vs.  Franklin Total Return

Great West Goldman

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Goldman Sachs are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Great West and Franklin Total

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

The idea behind Great West Goldman Sachs and Franklin Total Return 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.