Correlation Between Franklin Vertible and Guidemark(r) Large

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Can any of the company-specific risk be diversified away by investing in both Franklin Vertible and Guidemark(r) Large 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 Vertible and Guidemark(r) Large 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 Guidemark Large Cap, you can compare the effects of market volatilities on Franklin Vertible and Guidemark(r) Large 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 Vertible with a short position of Guidemark(r) Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Vertible and Guidemark(r) Large.

Diversification Opportunities for Franklin Vertible and Guidemark(r) Large

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Franklin and Guidemark(r) is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Guidemark Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Large Cap and Franklin Vertible 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 Guidemark(r) Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Large Cap has no effect on the direction of Franklin Vertible i.e., Franklin Vertible and Guidemark(r) Large go up and down completely randomly.

Pair Corralation between Franklin Vertible and Guidemark(r) Large

Assuming the 90 days horizon Franklin Vertible Securities is expected to generate 0.6 times more return on investment than Guidemark(r) Large. However, Franklin Vertible Securities is 1.66 times less risky than Guidemark(r) Large. It trades about 0.09 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about 0.04 per unit of risk. If you would invest  2,313  in Franklin Vertible Securities on October 26, 2024 and sell it today you would earn a total of  77.00  from holding Franklin Vertible Securities or generate 3.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Franklin Vertible Securities  vs.  Guidemark Large Cap

 Performance 
       Timeline  
Franklin Vertible 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Vertible Securities are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Franklin Vertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Guidemark Large Cap 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Large Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Guidemark(r) Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Vertible and Guidemark(r) Large Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Vertible and Guidemark(r) Large

The main advantage of trading using opposite Franklin Vertible and Guidemark(r) Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Vertible position performs unexpectedly, Guidemark(r) Large 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 Guidemark(r) Large will offset losses from the drop in Guidemark(r) Large's long position.
The idea behind Franklin Vertible Securities and Guidemark Large Cap 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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