Correlation Between DB Gold and Franklin Responsibly

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

Diversification Opportunities for DB Gold and Franklin Responsibly

0.99

Correlation Coefficient

DB Gold  Franklin Responsibly

No risk reduction

The 3 months correlation between DGP and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding DB Gold Double and Franklin Responsibly Sourced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Responsibly and DB 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 DB Gold Double 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 DB Gold i.e., DB Gold and Franklin Responsibly go up and down completely randomly.

Pair Corralation between DB Gold and Franklin Responsibly

Considering the 90-day investment horizon DB Gold Double is expected to generate 2.04 times more return on investment than Franklin Responsibly. However, DB Gold is 2.04 times more volatile than Franklin Responsibly Sourced. It trades about 0.01 of its potential returns per unit of risk. Franklin Responsibly Sourced is currently generating about 0.01 per unit of risk. If you would invest  7,249  in DB Gold Double on October 25, 2024 and sell it today you would earn a total of  40.00  from holding DB Gold Double or generate 0.55% return on investment over 90 days.

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

DB Gold Double  vs.  Franklin Responsibly Sourced

DB Gold Double

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DB Gold Double are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, DB Gold is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Franklin Responsibly

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Responsibly Sourced has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Franklin Responsibly is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with DB Gold and Franklin Responsibly

The main advantage of trading using opposite DB Gold and Franklin Responsibly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB 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 DB Gold Double 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.