Correlation Between Franklin Responsibly and Goldman Sachs

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

Diversification Opportunities for Franklin Responsibly and Goldman Sachs

1.0

Correlation Coefficient

Franklin Responsibly  Goldman Sachs

No risk reduction

The 3 months correlation between Franklin and Goldman is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Responsibly Sourced and Goldman Sachs Physical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Physical and Franklin Responsibly 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 Responsibly Sourced 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 Physical has no effect on the direction of Franklin Responsibly i.e., Franklin Responsibly and Goldman Sachs go up and down completely randomly.

Pair Corralation between Franklin Responsibly and Goldman Sachs

Given the investment horizon of 90 days Franklin Responsibly Sourced is expected to generate 1.0 times more return on investment than Goldman Sachs. However, Franklin Responsibly Sourced is 1.0 times less risky than Goldman Sachs. It trades about 0.08 of its potential returns per unit of risk. Goldman Sachs Physical is currently generating about 0.08 per unit of risk. If you would invest  2,581  in Franklin Responsibly Sourced on October 11, 2024 and sell it today you would earn a total of  989.00  from holding Franklin Responsibly Sourced or generate 38.32% return on investment over 90 days.

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

Franklin Responsibly Sourced  vs.  Goldman Sachs Physical

Franklin Responsibly

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Responsibly Sourced has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Franklin Responsibly is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Goldman Sachs Physical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Physical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Franklin Responsibly and Goldman Sachs

The main advantage of trading using opposite Franklin Responsibly and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Responsibly 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 Responsibly Sourced and Goldman Sachs Physical 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.