Correlation Between Franklin Convertible and Goldman Sachs

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

By analyzing existing cross correlation between Franklin Vertible Securities and Goldman Sachs International, you can compare the effects of market volatilities on Franklin Convertible and Goldman Sachs 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 Convertible with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Convertible and Goldman Sachs.

Diversification Opportunities for Franklin Convertible and Goldman Sachs

-0.25

Correlation Coefficient

Franklin Convertible  Goldman Sachs

Very good diversification

The 3 months correlation between Franklin and Goldman is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Goldman Sachs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Intern and Franklin Convertible 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 Vertible Securities are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Intern has no effect on the direction of Franklin Convertible i.e., Franklin Convertible and Goldman Sachs go up and down completely randomly.

Pair Corralation between Franklin Convertible and Goldman Sachs

Assuming the 90 days horizon Franklin Vertible Securities is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Vertible Securities is 1.21 times less risky than Goldman Sachs. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Goldman Sachs International is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,232  in Goldman Sachs International on December 21, 2024 and sell it today you would earn a total of  111.00  from holding Goldman Sachs International or generate 9.01% return on investment over 90 days.

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

Franklin Vertible Securities  vs.  Goldman Sachs International

Franklin Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Vertible Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Franklin Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs International are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Franklin Convertible and Goldman Sachs

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

The idea behind Franklin Vertible Securities and Goldman Sachs International 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.