Correlation Between Empire State and Franklin New
Can any of the company-specific risk be diversified away by investing in both Empire State and Franklin New 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 New 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 New York, you can compare the effects of market volatilities on Empire State and Franklin New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Franklin New.
Diversification Opportunities for Empire State and Franklin New
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and Franklin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of Empire State i.e., Empire State and Franklin New go up and down completely randomly.
Pair Corralation between Empire State and Franklin New
Given the investment horizon of 90 days Empire State Realty is expected to under-perform the Franklin New. In addition to that, Empire State is 6.21 times more volatile than Franklin New York. It trades about -0.28 of its total potential returns per unit of risk. Franklin New York is currently generating about 0.15 per unit of volatility. If you would invest 989.00 in Franklin New York on November 28, 2024 and sell it today you would earn a total of 8.00 from holding Franklin New York or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Franklin New York
Performance |
| Timeline |
| Empire State Realty |
| Franklin New York |
Empire State and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Franklin New
The main advantage of trading using opposite Empire State and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New'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 New vs. Doubleline Emerging Markets | Franklin New vs. Artisan High Income | Franklin New vs. Rbc Bluebay Emerging | Franklin New vs. Ultra Short Fixed Income |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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