Correlation Between Franklin Biotechnology and Guidepath Growth

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

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

Diversification Opportunities for Franklin Biotechnology and Guidepath Growth

0.51

Correlation Coefficient

Franklin Biotechnology  Guidepath Growth

Very weak diversification

The 3 months correlation between Franklin and Guidepath is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Biotechnology Discove and Guidepath Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Growth All and Franklin Biotechnology 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 Biotechnology Discovery are associated (or correlated) with Guidepath Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Growth All has no effect on the direction of Franklin Biotechnology i.e., Franklin Biotechnology and Guidepath Growth go up and down completely randomly.

Pair Corralation between Franklin Biotechnology and Guidepath Growth

Assuming the 90 days horizon Franklin Biotechnology Discovery is expected to generate 1.72 times more return on investment than Guidepath Growth. However, Franklin Biotechnology is 1.72 times more volatile than Guidepath Growth Allocation. It trades about 0.32 of its potential returns per unit of risk. Guidepath Growth Allocation is currently generating about 0.09 per unit of risk. If you would invest  14,973  in Franklin Biotechnology Discovery on September 12, 2025 and sell it today you would earn a total of  4,628  from holding Franklin Biotechnology Discovery or generate 30.91% return on investment over 90 days.

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

Franklin Biotechnology Discove  vs.  Guidepath Growth Allocation

Franklin Biotechnology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Biotechnology Discovery are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Franklin Biotechnology showed solid returns over the last few months and may actually be approaching a breakup point.

Guidepath Growth All

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Growth Allocation are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guidepath Growth 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 Biotechnology and Guidepath Growth

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

The idea behind Franklin Biotechnology Discovery and Guidepath Growth Allocation 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 Global Correlations module to find global opportunities by holding instruments from different markets.