Correlation Between Ares Commercial and Franklin BSP
Can any of the company-specific risk be diversified away by investing in both Ares Commercial and Franklin BSP 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 Ares Commercial and Franklin BSP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Commercial Real and Franklin BSP Realty, you can compare the effects of market volatilities on Ares Commercial and Franklin BSP 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 Ares Commercial with a short position of Franklin BSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Commercial and Franklin BSP.
Diversification Opportunities for Ares Commercial and Franklin BSP
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ares and Franklin is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ares Commercial Real and Franklin BSP Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin BSP Realty and Ares Commercial 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 Ares Commercial Real are associated (or correlated) with Franklin BSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin BSP Realty has no effect on the direction of Ares Commercial i.e., Ares Commercial and Franklin BSP go up and down completely randomly.
Pair Corralation between Ares Commercial and Franklin BSP
Given the investment horizon of 90 days Ares Commercial Real is expected to under-perform the Franklin BSP. In addition to that, Ares Commercial is 2.91 times more volatile than Franklin BSP Realty. It trades about -0.21 of its total potential returns per unit of risk. Franklin BSP Realty is currently generating about 0.19 per unit of volatility. If you would invest 1,265 in Franklin BSP Realty on November 18, 2024 and sell it today you would earn a total of 57.00 from holding Franklin BSP Realty or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Commercial Real vs. Franklin BSP Realty
Performance |
| Timeline |
| Ares Commercial Real |
| Franklin BSP Realty |
Ares Commercial and Franklin BSP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Commercial and Franklin BSP
The main advantage of trading using opposite Ares Commercial and Franklin BSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Commercial position performs unexpectedly, Franklin BSP 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 BSP will offset losses from the drop in Franklin BSP's long position.| Ares Commercial vs. Two Harbors Investments | Ares Commercial vs. Apollo Commercial Real | Ares Commercial vs. Ellington Financial | Ares Commercial vs. Dynex Capital |
| Franklin BSP vs. AGNC Investment Corp | Franklin BSP vs. Nexpoint Real Estate | Franklin BSP vs. Ladder Capital Corp | Franklin BSP vs. Apollo Commercial Real |
Check out your portfolio center.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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