Correlation Between Franklin BSP and Orchid Island
Can any of the company-specific risk be diversified away by investing in both Franklin BSP and Orchid Island 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 Orchid Island 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 Orchid Island Capital, you can compare the effects of market volatilities on Franklin BSP and Orchid Island 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 Orchid Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin BSP and Orchid Island.
Diversification Opportunities for Franklin BSP and Orchid Island
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Orchid is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Franklin BSP Realty and Orchid Island Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchid Island Capital 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 Orchid Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchid Island Capital has no effect on the direction of Franklin BSP i.e., Franklin BSP and Orchid Island go up and down completely randomly.
Pair Corralation between Franklin BSP and Orchid Island
Given the investment horizon of 90 days Franklin BSP Realty is expected to generate 0.95 times more return on investment than Orchid Island. However, Franklin BSP Realty is 1.05 times less risky than Orchid Island. It trades about 0.03 of its potential returns per unit of risk. Orchid Island Capital is currently generating about 0.02 per unit of risk. If you would invest 1,126 in Franklin BSP Realty on September 4, 2024 and sell it today you would earn a total of 184.00 from holding Franklin BSP Realty or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin BSP Realty vs. Orchid Island Capital
Performance |
| Timeline |
| Franklin BSP Realty |
| Orchid Island Capital |
Franklin BSP and Orchid Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin BSP and Orchid Island
The main advantage of trading using opposite Franklin BSP and Orchid Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin BSP position performs unexpectedly, Orchid Island 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 Orchid Island will offset losses from the drop in Orchid Island's long position.| Franklin BSP vs. AGNC Investment Corp | Franklin BSP vs. Nexpoint Real Estate | Franklin BSP vs. Great Ajax Corp | Franklin BSP vs. Ladder Capital Corp |
| Orchid Island vs. Blackstone Mortgage Trust | Orchid Island vs. Arbor Realty Trust | Orchid Island vs. Omega Healthcare Investors | Orchid Island vs. Medical Properties Trust |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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