Correlation Between Europac Gold and Franklin Conservative

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

By analyzing existing cross correlation between Europac Gold Fund and Franklin Servative Allocation, you can compare the effects of market volatilities on Europac Gold and Franklin Conservative 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 Europac Gold with a short position of Franklin Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europac Gold and Franklin Conservative.

Diversification Opportunities for Europac Gold and Franklin Conservative

0.2

Correlation Coefficient

Europac Gold  Franklin Conservative

Modest diversification

The 3 months correlation between Europac and Franklin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Franklin Servative Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Conservative and Europac 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 Europac Gold Fund are associated (or correlated) with Franklin Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Conservative has no effect on the direction of Europac Gold i.e., Europac Gold and Franklin Conservative go up and down completely randomly.

Pair Corralation between Europac Gold and Franklin Conservative

Assuming the 90 days horizon Europac Gold Fund is expected to under-perform the Franklin Conservative. In addition to that, Europac Gold is 4.29 times more volatile than Franklin Servative Allocation. It trades about -0.12 of its total potential returns per unit of risk. Franklin Servative Allocation is currently generating about 0.04 per unit of volatility. If you would invest  1,395  in Franklin Servative Allocation on October 25, 2024 and sell it today you would earn a total of  15.00  from holding Franklin Servative Allocation or generate 1.08% return on investment over 90 days.

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

Europac Gold Fund  vs.  Franklin Servative Allocation

Europac Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europac Gold Fund 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 technical and fundamental 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.

Franklin Conservative

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Servative Allocation are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europac Gold and Franklin Conservative

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

The idea behind Europac Gold Fund and Franklin Servative Allocation 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.