Correlation Between Guidemark Large and Franklin
Can any of the company-specific risk be diversified away by investing in both Guidemark Large and Franklin 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 Guidemark Large and Franklin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidemark Large Cap and Franklin K2 Alternative, you can compare the effects of market volatilities on Guidemark Large and Franklin 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 Guidemark Large with a short position of Franklin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark Large and Franklin.
Diversification Opportunities for Guidemark Large and Franklin
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guidemark and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Franklin K2 Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin K2 Alternative and Guidemark Large 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 Guidemark Large Cap are associated (or correlated) with Franklin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin K2 Alternative has no effect on the direction of Guidemark Large i.e., Guidemark Large and Franklin go up and down completely randomly.
Pair Corralation between Guidemark Large and Franklin
Assuming the 90 days horizon Guidemark Large Cap is expected to under-perform the Franklin. In addition to that, Guidemark Large is 3.11 times more volatile than Franklin K2 Alternative. It trades about -0.08 of its total potential returns per unit of risk. Franklin K2 Alternative is currently generating about -0.04 per unit of volatility. If you would invest 1,145 in Franklin K2 Alternative on January 26, 2024 and sell it today you would lose (2.00) from holding Franklin K2 Alternative or give up 0.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Guidemark Large Cap vs. Franklin K2 Alternative
Performance |
Timeline |
Guidemark Large Cap |
Franklin K2 Alternative |
Guidemark Large and Franklin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Guidemark Large and Franklin
The main advantage of trading using opposite Guidemark Large and Franklin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark Large position performs unexpectedly, Franklin 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 will offset losses from the drop in Franklin's long position.Guidemark Large vs. Amana Income Fund | Guidemark Large vs. Amana Growth Fund | Guidemark Large vs. Amana Participation Fund | Guidemark Large vs. HUMANA INC |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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