Correlation Between Empire State and Franklin BSP
Can any of the company-specific risk be diversified away by investing in both Empire State 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 Empire State and Franklin BSP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Franklin BSP Realty, you can compare the effects of market volatilities on Empire State 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 Empire State with a short position of Franklin BSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Franklin BSP.
Diversification Opportunities for Empire State and Franklin BSP
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empire and Franklin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty 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 Empire State 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 Empire State Realty 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 Empire State i.e., Empire State and Franklin BSP go up and down completely randomly.
Pair Corralation between Empire State and Franklin BSP
Given the investment horizon of 90 days Empire State Realty is expected to under-perform the Franklin BSP. In addition to that, Empire State is 2.97 times more volatile than Franklin BSP Realty. It trades about -0.16 of its total potential returns per unit of risk. Franklin BSP Realty is currently generating about 0.06 per unit of volatility. If you would invest 2,128 in Franklin BSP Realty on November 28, 2024 and sell it today you would earn a total of 14.00 from holding Franklin BSP Realty or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire State Realty vs. Franklin BSP Realty
Performance |
| Timeline |
| Empire State Realty |
| Franklin BSP Realty |
Empire State and Franklin BSP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Franklin BSP
The main advantage of trading using opposite Empire State and Franklin BSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Franklin BSP vs. ARMOUR Residential REIT | Franklin BSP vs. PennyMac Mortgage Investment | Franklin BSP vs. Rithm Capital Corp | Franklin BSP vs. Chimera Investment |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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