Correlation Between Goldman Sachs and Franklin Real

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

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

Diversification Opportunities for Goldman Sachs and Franklin Real

-0.33

Correlation Coefficient

Goldman Sachs  Franklin Real

Very good diversification

The 3 months correlation between Goldman and Franklin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Franklin Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Real Estate and Goldman Sachs 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 Goldman Sachs Technology are associated (or correlated) with Franklin Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Real Estate has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Franklin Real go up and down completely randomly.

Pair Corralation between Goldman Sachs and Franklin Real

Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 1.17 times more return on investment than Franklin Real. However, Goldman Sachs is 1.17 times more volatile than Franklin Real Estate. It trades about 0.1 of its potential returns per unit of risk. Franklin Real Estate is currently generating about 0.03 per unit of risk. If you would invest  2,456  in Goldman Sachs Technology on September 12, 2024 and sell it today you would earn a total of  1,247  from holding Goldman Sachs Technology or generate 50.77% return on investment over 90 days.

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

Goldman Sachs Technology  vs.  Franklin Real Estate

Goldman Sachs Technology

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Franklin Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Goldman Sachs and Franklin Real

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

The idea behind Goldman Sachs Technology and Franklin Real Estate 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.