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 Short 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

-0.92

Correlation Coefficient

DB Gold  Franklin Responsibly

Pay attention - limited upside

The 3 months correlation between DGZ and Franklin is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding DB Gold Short 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 Short 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 Short is expected to under-perform the Franklin Responsibly. In addition to that, DB Gold is 1.9 times more volatile than Franklin Responsibly Sourced. It trades about -0.16 of its total potential returns per unit of risk. Franklin Responsibly Sourced is currently generating about 0.32 per unit of volatility. If you would invest  3,467  in Franklin Responsibly Sourced on December 19, 2024 and sell it today you would earn a total of  598.00  from holding Franklin Responsibly Sourced or generate 17.25% return on investment over 90 days.

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

DB Gold Short  vs.  Franklin Responsibly Sourced

DB Gold Short

Risk-Adjusted Performance

Very Weak

Over the last 90 days DB Gold Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

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 25 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Franklin Responsibly disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 Short 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.