Correlation Between Dow Jones and Franklin BSP
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Franklin BSP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Franklin BSP Realty, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Franklin BSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Franklin BSP.
Diversification Opportunities for Dow Jones and Franklin BSP
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and Franklin is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Franklin BSP go up and down completely randomly.
Pair Corralation between Dow Jones and Franklin BSP
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.9 times more return on investment than Franklin BSP. However, Dow Jones Industrial is 1.11 times less risky than Franklin BSP. It trades about 0.26 of its potential returns per unit of risk. Franklin BSP Realty is currently generating about 0.0 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Franklin BSP Realty
Performance |
| Timeline |
Dow Jones and Franklin BSP Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Franklin BSP Realty
Pair trading matchups for Franklin BSP
Pair Trading with Dow Jones and Franklin BSP
The main advantage of trading using opposite Dow Jones and Franklin BSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Franklin BSP vs. AGNC Investment Corp | Franklin BSP vs. Aquagold International | Franklin BSP vs. Morningstar Unconstrained Allocation | Franklin BSP vs. Thrivent High Yield |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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