Correlation Between Franklin High and Virtus Real
Can any of the company-specific risk be diversified away by investing in both Franklin High and Virtus Real 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 High and Virtus Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Yield and Virtus Real Estate, you can compare the effects of market volatilities on Franklin High and Virtus Real 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 High with a short position of Virtus Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Virtus Real.
Diversification Opportunities for Franklin High and Virtus Real
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Virtus is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Virtus Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Real Estate and Franklin High 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 High Yield are associated (or correlated) with Virtus Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Real Estate has no effect on the direction of Franklin High i.e., Franklin High and Virtus Real go up and down completely randomly.
Pair Corralation between Franklin High and Virtus Real
Assuming the 90 days horizon Franklin High is expected to generate 1.55 times less return on investment than Virtus Real. But when comparing it to its historical volatility, Franklin High Yield is 2.64 times less risky than Virtus Real. It trades about 0.19 of its potential returns per unit of risk. Virtus Real Estate is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,129 in Virtus Real Estate on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Virtus Real Estate or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Virtus Real Estate
Performance |
| Timeline |
| Franklin High Yield |
| Virtus Real Estate |
Franklin High and Virtus Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Virtus Real
The main advantage of trading using opposite Franklin High and Virtus Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Virtus Real 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 Virtus Real will offset losses from the drop in Virtus Real's long position.| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
| Virtus Real vs. Realty Income | Virtus Real vs. Dynex Capital | Virtus Real vs. First Industrial Realty | Virtus Real vs. Healthcare Realty 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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