Correlation Between Guggenheim Strategic and Franklin Resources

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Can any of the company-specific risk be diversified away by investing in both Guggenheim Strategic and Franklin Resources 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 Guggenheim Strategic and Franklin Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Strategic Opportunities and Franklin Resources, you can compare the effects of market volatilities on Guggenheim Strategic and Franklin Resources 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 Guggenheim Strategic with a short position of Franklin Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Strategic and Franklin Resources.

Diversification Opportunities for Guggenheim Strategic and Franklin Resources

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Guggenheim and Franklin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and Franklin Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Resources and Guggenheim Strategic 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 Guggenheim Strategic Opportunities are associated (or correlated) with Franklin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Resources has no effect on the direction of Guggenheim Strategic i.e., Guggenheim Strategic and Franklin Resources go up and down completely randomly.

Pair Corralation between Guggenheim Strategic and Franklin Resources

Considering the 90-day investment horizon Guggenheim Strategic is expected to generate 2.24 times less return on investment than Franklin Resources. But when comparing it to its historical volatility, Guggenheim Strategic Opportunities is 3.53 times less risky than Franklin Resources. It trades about 0.23 of its potential returns per unit of risk. Franklin Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,921  in Franklin Resources on September 10, 2024 and sell it today you would earn a total of  271.00  from holding Franklin Resources or generate 14.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.46%
ValuesDaily Returns

Guggenheim Strategic Opportuni  vs.  Franklin Resources

 Performance 
       Timeline  
Guggenheim Strategic 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Strategic Opportunities are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Strategic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Franklin Resources 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Franklin Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Guggenheim Strategic and Franklin Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guggenheim Strategic and Franklin Resources

The main advantage of trading using opposite Guggenheim Strategic and Franklin Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Strategic position performs unexpectedly, Franklin Resources 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 Resources will offset losses from the drop in Franklin Resources' long position.
The idea behind Guggenheim Strategic Opportunities and Franklin Resources 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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