Correlation Between First Industrial and Franklin Street
Can any of the company-specific risk be diversified away by investing in both First Industrial and Franklin Street 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 First Industrial and Franklin Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Industrial Realty and Franklin Street Properties, you can compare the effects of market volatilities on First Industrial and Franklin Street 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 First Industrial with a short position of Franklin Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Franklin Street.
Diversification Opportunities for First Industrial and Franklin Street
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Franklin is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Franklin Street Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Street Prop and First Industrial 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 First Industrial Realty are associated (or correlated) with Franklin Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Street Prop has no effect on the direction of First Industrial i.e., First Industrial and Franklin Street go up and down completely randomly.
Pair Corralation between First Industrial and Franklin Street
Allowing for the 90-day total investment horizon First Industrial is expected to generate 4.35 times less return on investment than Franklin Street. But when comparing it to its historical volatility, First Industrial Realty is 3.34 times less risky than Franklin Street. It trades about 0.08 of its potential returns per unit of risk. Franklin Street Properties is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 180.00 in Franklin Street Properties on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Franklin Street Properties or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. Franklin Street Properties
Performance |
| Timeline |
| First Industrial Realty |
| Franklin Street Prop |
First Industrial and Franklin Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and Franklin Street
The main advantage of trading using opposite First Industrial and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, Franklin Street 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 Street will offset losses from the drop in Franklin Street's long position.| First Industrial vs. LXP Industrial Trust | First Industrial vs. Plymouth Industrial REIT | First Industrial vs. Global Self Storage | First Industrial vs. Terreno Realty |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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