Correlation Between GraniteShares Gold and Franklin Responsibly

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

By analyzing existing cross correlation between GraniteShares Gold Trust and Franklin Responsibly Sourced, you can compare the effects of market volatilities on GraniteShares Gold and Franklin Responsibly 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 GraniteShares Gold with a short position of Franklin Responsibly. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares Gold and Franklin Responsibly.

Diversification Opportunities for GraniteShares Gold and Franklin Responsibly

0.7

Correlation Coefficient

GraniteShares Gold  Franklin Responsibly

Poor diversification

The 3 months correlation between GraniteShares and Franklin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares Gold Trust and Franklin Responsibly Sourced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Responsibly and GraniteShares Gold 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 GraniteShares Gold Trust are associated (or correlated) with Franklin Responsibly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Responsibly has no effect on the direction of GraniteShares Gold i.e., GraniteShares Gold and Franklin Responsibly go up and down completely randomly.

Pair Corralation between GraniteShares Gold and Franklin Responsibly

Considering the 90-day investment horizon GraniteShares Gold is expected to generate 1.01 times less return on investment than Franklin Responsibly. But when comparing it to its historical volatility, GraniteShares Gold Trust is 1.07 times less risky than Franklin Responsibly. It trades about 0.31 of its potential returns per unit of risk. Franklin Responsibly Sourced is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  3,495  in Franklin Responsibly Sourced on December 23, 2024 and sell it today you would earn a total of  550.00  from holding Franklin Responsibly Sourced or generate 15.74% return on investment over 90 days.

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

GraniteShares Gold Trust  vs.  Franklin Responsibly Sourced

GraniteShares Gold Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares Gold Trust are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, GraniteShares Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Franklin Responsibly

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Responsibly Sourced are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Franklin Responsibly disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GraniteShares Gold and Franklin Responsibly

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

The idea behind GraniteShares Gold Trust and Franklin Responsibly Sourced 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.