Correlation Between Equity Commonwealth and Franklin Street
Can any of the company-specific risk be diversified away by investing in both Equity Commonwealth and Franklin Street 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 Equity Commonwealth and Franklin Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Commonwealth and Franklin Street Properties, you can compare the effects of market volatilities on Equity Commonwealth and Franklin Street 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 Equity Commonwealth with a short position of Franklin Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Commonwealth and Franklin Street.
Diversification Opportunities for Equity Commonwealth and Franklin Street
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Equity and Franklin is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Equity Commonwealth and Franklin Street Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Street Prop and Equity Commonwealth 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 Equity Commonwealth are associated (or correlated) with Franklin Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Street Prop has no effect on the direction of Equity Commonwealth i.e., Equity Commonwealth and Franklin Street go up and down completely randomly.
Pair Corralation between Equity Commonwealth and Franklin Street
Considering the 90-day investment horizon Equity Commonwealth is expected to generate 0.26 times more return on investment than Franklin Street. However, Equity Commonwealth is 3.83 times less risky than Franklin Street. It trades about 0.04 of its potential returns per unit of risk. Franklin Street Properties is currently generating about -0.01 per unit of risk. If you would invest 1,867 in Equity Commonwealth on August 24, 2024 and sell it today you would earn a total of 141.00 from holding Equity Commonwealth or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Commonwealth vs. Franklin Street Properties
Performance |
| Timeline |
| Equity Commonwealth |
| Franklin Street Prop |
Equity Commonwealth and Franklin Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Commonwealth and Franklin Street
The main advantage of trading using opposite Equity Commonwealth and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Commonwealth position performs unexpectedly, Franklin Street 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 Street will offset losses from the drop in Franklin Street's long position.| Equity Commonwealth vs. Hudson Pacific Properties | Equity Commonwealth vs. SL Green Realty | Equity Commonwealth vs. Vornado Realty Trust | Equity Commonwealth vs. Vornado Realty Trust |
| Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Highwoods Properties | Franklin Street vs. Douglas Emmett | Franklin Street vs. Equity Commonwealth |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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