Correlation Between Franklin BSP and Extendicare
Can any of the company-specific risk be diversified away by investing in both Franklin BSP and Extendicare 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 Franklin BSP and Extendicare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin BSP Realty and Extendicare, you can compare the effects of market volatilities on Franklin BSP and Extendicare 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 Franklin BSP with a short position of Extendicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin BSP and Extendicare.
Diversification Opportunities for Franklin BSP and Extendicare
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Extendicare is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Franklin BSP Realty and Extendicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extendicare and Franklin BSP 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 Franklin BSP Realty are associated (or correlated) with Extendicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extendicare has no effect on the direction of Franklin BSP i.e., Franklin BSP and Extendicare go up and down completely randomly.
Pair Corralation between Franklin BSP and Extendicare
Assuming the 90 days trading horizon Franklin BSP is expected to generate 1.1 times less return on investment than Extendicare. In addition to that, Franklin BSP is 1.09 times more volatile than Extendicare. It trades about 0.07 of its total potential returns per unit of risk. Extendicare is currently generating about 0.09 per unit of volatility. If you would invest 484.00 in Extendicare on August 30, 2024 and sell it today you would earn a total of 16.00 from holding Extendicare or generate 3.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 8.47% |
Values | Daily Returns |
Franklin BSP Realty vs. Extendicare
Performance |
Timeline |
Franklin BSP Realty |
Extendicare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Franklin BSP and Extendicare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin BSP and Extendicare
The main advantage of trading using opposite Franklin BSP and Extendicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin BSP position performs unexpectedly, Extendicare 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 Extendicare will offset losses from the drop in Extendicare's long position.Franklin BSP vs. ACRES Commercial Realty | Franklin BSP vs. Dynex Capital | Franklin BSP vs. PennyMac Mortgage Investment | Franklin BSP vs. AG Mortgage Investment |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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