Correlation Between MicroSectors Gold and Franklin Responsibly

Can any of the company-specific risk be diversified away by investing in both MicroSectors 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 MicroSectors 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 MicroSectors Gold 3X and Franklin Responsibly Sourced, you can compare the effects of market volatilities on MicroSectors 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 MicroSectors Gold with a short position of Franklin Responsibly. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Gold and Franklin Responsibly.

Diversification Opportunities for MicroSectors Gold and Franklin Responsibly

-1.0

Correlation Coefficient

MicroSectors Gold  Franklin Responsibly

Pay attention - limited upside

The 3 months correlation between MicroSectors and Franklin is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Gold 3X and Franklin Responsibly Sourced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Responsibly and MicroSectors 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 MicroSectors Gold 3X 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 MicroSectors Gold i.e., MicroSectors Gold and Franklin Responsibly go up and down completely randomly.

Pair Corralation between MicroSectors Gold and Franklin Responsibly

Given the investment horizon of 90 days MicroSectors Gold 3X is expected to under-perform the Franklin Responsibly. In addition to that, MicroSectors Gold is 2.89 times more volatile than Franklin Responsibly Sourced. It trades about -0.29 of its total potential returns per unit of risk. Franklin Responsibly Sourced is currently generating about 0.29 per unit of volatility. 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 Against
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

MicroSectors Gold 3X  vs.  Franklin Responsibly Sourced

MicroSectors Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days MicroSectors Gold 3X has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional 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 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 MicroSectors Gold and Franklin Responsibly

The main advantage of trading using opposite MicroSectors Gold and Franklin Responsibly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors 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 MicroSectors Gold 3X 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.