Correlation Between Invesco Balanced-risk and Franklin Gold

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

By analyzing existing cross correlation between Invesco Balanced Risk Modity and Franklin Gold Precious, you can compare the effects of market volatilities on Invesco Balanced-risk and Franklin Gold 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 Invesco Balanced-risk with a short position of Franklin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Balanced-risk and Franklin Gold.

Diversification Opportunities for Invesco Balanced-risk and Franklin Gold

0.83

Correlation Coefficient

Invesco Balanced-risk  Franklin Gold

Very poor diversification

The 3 months correlation between Invesco and Franklin is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Balanced Risk Modity and Franklin Gold Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Gold Precious and Invesco Balanced-risk 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 Invesco Balanced Risk Modity are associated (or correlated) with Franklin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Gold Precious has no effect on the direction of Invesco Balanced-risk i.e., Invesco Balanced-risk and Franklin Gold go up and down completely randomly.

Pair Corralation between Invesco Balanced-risk and Franklin Gold

Assuming the 90 days horizon Invesco Balanced-risk is expected to generate 12.78 times less return on investment than Franklin Gold. But when comparing it to its historical volatility, Invesco Balanced Risk Modity is 2.38 times less risky than Franklin Gold. It trades about 0.01 of its potential returns per unit of risk. Franklin Gold Precious is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,285  in Franklin Gold Precious on October 5, 2024 and sell it today you would earn a total of  259.00  from holding Franklin Gold Precious or generate 20.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.68%
Values	Daily Returns

Invesco Balanced Risk Modity  vs.  Franklin Gold Precious

Invesco Balanced Risk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Balanced Risk Modity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Franklin Gold Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Gold Precious has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Invesco Balanced-risk and Franklin Gold

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

The idea behind Invesco Balanced Risk Modity and Franklin Gold Precious 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.