Correlation Between Goldman Sachs and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Franklin Growth 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 Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Dynamic and Franklin Growth Fund, you can compare the effects of market volatilities on Goldman Sachs and Franklin Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Franklin Growth.
Diversification Opportunities for Goldman Sachs and Franklin Growth
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and Franklin is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Dynamic and Franklin Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth 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 Dynamic are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Franklin Growth go up and down completely randomly.
Pair Corralation between Goldman Sachs and Franklin Growth
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.19 times less return on investment than Franklin Growth. But when comparing it to its historical volatility, Goldman Sachs Dynamic is 1.14 times less risky than Franklin Growth. It trades about 0.09 of its potential returns per unit of risk. Franklin Growth Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,268 in Franklin Growth Fund on January 26, 2024 and sell it today you would earn a total of 3,760 from holding Franklin Growth Fund or generate 40.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Dynamic vs. Franklin Growth Fund
Performance |
| Timeline |
| Goldman Sachs Dynamic |
| Franklin Growth |
Goldman Sachs and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Franklin Growth
The main advantage of trading using opposite Goldman Sachs and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.The idea behind Goldman Sachs Dynamic and Franklin Growth Fund 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.| Franklin Growth vs. Amana Income Fund | Franklin Growth vs. Amana Income Fund | Franklin Growth vs. Amana Developing World | Franklin Growth vs. Amana Developing World |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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