Correlation Between Franklin Adjustable and Guggenheim World

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

By analyzing existing cross correlation between Franklin Adjustable Government and Guggenheim World Equity, you can compare the effects of market volatilities on Franklin Adjustable and Guggenheim World 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 Franklin Adjustable with a short position of Guggenheim World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Guggenheim World.

Diversification Opportunities for Franklin Adjustable and Guggenheim World

-0.51

Correlation Coefficient

Franklin Adjustable  Guggenheim World

Excellent diversification

The 3 months correlation between Franklin and Guggenheim is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Guggenheim World Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim World Equity and Franklin Adjustable 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 Franklin Adjustable Government are associated (or correlated) with Guggenheim World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim World Equity has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Guggenheim World go up and down completely randomly.

Pair Corralation between Franklin Adjustable and Guggenheim World

Assuming the 90 days horizon Franklin Adjustable is expected to generate 2.78 times less return on investment than Guggenheim World. But when comparing it to its historical volatility, Franklin Adjustable Government is 5.69 times less risky than Guggenheim World. It trades about 0.25 of its potential returns per unit of risk. Guggenheim World Equity is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,630  in Guggenheim World Equity on October 27, 2024 and sell it today you would earn a total of  25.00  from holding Guggenheim World Equity or generate 1.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Franklin Adjustable Government  vs.  Guggenheim World Equity

Franklin Adjustable

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Adjustable Government are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Franklin Adjustable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guggenheim World Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Franklin Adjustable and Guggenheim World

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

The idea behind Franklin Adjustable Government and Guggenheim World Equity 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .