Correlation Between Franklin Gold and Invesco Global

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

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

Diversification Opportunities for Franklin Gold and Invesco Global

0.78

Correlation Coefficient

Franklin Gold  Invesco Global

Poor diversification

The 3 months correlation between Franklin and Invesco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Gold Precious and Invesco Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Real and Franklin 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 Franklin Gold Precious are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Real has no effect on the direction of Franklin Gold i.e., Franklin Gold and Invesco Global go up and down completely randomly.

Pair Corralation between Franklin Gold and Invesco Global

Assuming the 90 days horizon Franklin Gold Precious is expected to under-perform the Invesco Global. In addition to that, Franklin Gold is 2.9 times more volatile than Invesco Global Real. It trades about -0.32 of its total potential returns per unit of risk. Invesco Global Real is currently generating about -0.27 per unit of volatility. If you would invest  917.00  in Invesco Global Real on October 9, 2024 and sell it today you would lose (50.00) from holding Invesco Global Real or give up 5.45% of portfolio value over 90 days.

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

Franklin Gold Precious  vs.  Invesco Global Real

Franklin Gold Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Gold Precious 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 basic 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.

Invesco Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Global Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Franklin Gold and Invesco Global

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

The idea behind Franklin Gold Precious and Invesco Global Real 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.