Correlation Between Gmo Us and Franklin Growth

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

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

Diversification Opportunities for Gmo Us and Franklin Growth

-0.65

Correlation Coefficient

Gmo Us  Franklin Growth

Excellent diversification

The 3 months correlation between Gmo and Franklin is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Treasury Fund and Franklin Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Oppo and Gmo Us 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 Gmo Treasury Fund are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Oppo has no effect on the direction of Gmo Us i.e., Gmo Us and Franklin Growth go up and down completely randomly.

Pair Corralation between Gmo Us and Franklin Growth

Assuming the 90 days horizon Gmo Treasury Fund is expected to generate 0.05 times more return on investment than Franklin Growth. However, Gmo Treasury Fund is 18.37 times less risky than Franklin Growth. It trades about 0.25 of its potential returns per unit of risk. Franklin Growth Opportunities is currently generating about -0.08 per unit of risk. If you would invest  495.00  in Gmo Treasury Fund on December 26, 2024 and sell it today you would earn a total of  6.00  from holding Gmo Treasury Fund or generate 1.21% return on investment over 90 days.

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

Gmo Treasury Fund  vs.  Franklin Growth Opportunities

Gmo Treasury

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Treasury Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Growth Oppo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Growth Opportunities 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 Gmo Us and Franklin Growth

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

The idea behind Gmo Treasury Fund and Franklin Growth Opportunities 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.