Correlation Between Goldman Sachs and Franklin FTSE

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

By analyzing existing cross correlation between Goldman Sachs Future and Franklin FTSE Taiwan, you can compare the effects of market volatilities on Goldman Sachs and Franklin FTSE 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 FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Franklin FTSE.

Diversification Opportunities for Goldman Sachs and Franklin FTSE

-0.4

Correlation Coefficient

Goldman Sachs  Franklin FTSE

Very good diversification

The 3 months correlation between Goldman and Franklin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and Franklin FTSE Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Taiwan 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 Future are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Taiwan has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Franklin FTSE go up and down completely randomly.

Pair Corralation between Goldman Sachs and Franklin FTSE

Given the investment horizon of 90 days Goldman Sachs is expected to generate 3.35 times less return on investment than Franklin FTSE. But when comparing it to its historical volatility, Goldman Sachs Future is 2.03 times less risky than Franklin FTSE. It trades about 0.06 of its potential returns per unit of risk. Franklin FTSE Taiwan is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,326  in Franklin FTSE Taiwan on September 5, 2024 and sell it today you would earn a total of  520.00  from holding Franklin FTSE Taiwan or generate 12.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.82%
Values	Daily Returns

Goldman Sachs Future  vs.  Franklin FTSE Taiwan

Goldman Sachs Future

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Franklin FTSE Taiwan

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin FTSE Taiwan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Franklin FTSE is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Goldman Sachs and Franklin FTSE

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

The idea behind Goldman Sachs Future and Franklin FTSE Taiwan 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.