Correlation Between Franklin Utilities and Gabelli Utilities

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

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

Diversification Opportunities for Franklin Utilities and Gabelli Utilities

0.64

Correlation Coefficient

Franklin Utilities  Gabelli Utilities

Poor diversification

The 3 months correlation between Franklin and Gabelli is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Utilities Fund and Gabelli Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utilities and Franklin Utilities 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 Utilities Fund are associated (or correlated) with Gabelli Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utilities has no effect on the direction of Franklin Utilities i.e., Franklin Utilities and Gabelli Utilities go up and down completely randomly.

Pair Corralation between Franklin Utilities and Gabelli Utilities

Assuming the 90 days horizon Franklin Utilities Fund is expected to generate 0.98 times more return on investment than Gabelli Utilities. However, Franklin Utilities Fund is 1.02 times less risky than Gabelli Utilities. It trades about 0.04 of its potential returns per unit of risk. Gabelli Utilities is currently generating about 0.03 per unit of risk. If you would invest  2,236  in Franklin Utilities Fund on December 22, 2024 and sell it today you would earn a total of  53.00  from holding Franklin Utilities Fund or generate 2.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Franklin Utilities Fund  vs.  Gabelli Utilities

Franklin Utilities

Risk-Adjusted Performance

Insignificant

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

Gabelli Utilities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utilities are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Utilities 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 Utilities and Gabelli Utilities

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

The idea behind Franklin Utilities Fund and Gabelli Utilities 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.