Correlation Between Copeland Risk and Franklin Gold

Can any of the company-specific risk be diversified away by investing in both Copeland 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 Copeland 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 Copeland Risk Managed and Franklin Gold Precious, you can compare the effects of market volatilities on Copeland 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 Copeland Risk with a short position of Franklin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copeland Risk and Franklin Gold.

Diversification Opportunities for Copeland Risk and Franklin Gold

-0.63

Correlation Coefficient

Copeland Risk  Franklin Gold

Excellent diversification

The 3 months correlation between Copeland and Franklin is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Copeland Risk Managed 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 Copeland 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 Copeland Risk Managed 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 Copeland Risk i.e., Copeland Risk and Franklin Gold go up and down completely randomly.

Pair Corralation between Copeland Risk and Franklin Gold

Assuming the 90 days horizon Copeland Risk Managed is expected to under-perform the Franklin Gold. But the mutual fund apears to be less risky and, when comparing its historical volatility, Copeland Risk Managed is 1.75 times less risky than Franklin Gold. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Franklin Gold Precious is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,482  in Franklin Gold Precious on December 29, 2024 and sell it today you would earn a total of  612.00  from holding Franklin Gold Precious or generate 41.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Copeland Risk Managed  vs.  Franklin Gold Precious

Copeland Risk Managed

Risk-Adjusted Performance

Very Weak

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

Franklin Gold Precious

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Gold Precious are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Franklin Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Copeland Risk and Franklin Gold

The main advantage of trading using opposite Copeland Risk and Franklin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copeland 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 Copeland Risk Managed 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.