Correlation Between Franklin Real and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Franklin Real and Franklin Convertible 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 Real and Franklin Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Real Estate and Franklin Vertible Securities, you can compare the effects of market volatilities on Franklin Real and Franklin Convertible 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 Real with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Franklin Convertible.
Diversification Opportunities for Franklin Real and Franklin Convertible
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Franklin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible and Franklin Real 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 Real Estate are associated (or correlated) with Franklin Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of Franklin Real i.e., Franklin Real and Franklin Convertible go up and down completely randomly.
Pair Corralation between Franklin Real and Franklin Convertible
Assuming the 90 days horizon Franklin Real is expected to generate 4.82 times less return on investment than Franklin Convertible. In addition to that, Franklin Real is 1.75 times more volatile than Franklin Vertible Securities. It trades about 0.06 of its total potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.52 per unit of volatility. If you would invest 2,235 in Franklin Vertible Securities on August 29, 2024 and sell it today you would earn a total of 152.00 from holding Franklin Vertible Securities or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. Franklin Vertible Securities
Performance |
| Timeline |
| Franklin Real Estate |
| Franklin Convertible |
Franklin Real and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Franklin Convertible
The main advantage of trading using opposite Franklin Real and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, Franklin Convertible 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 Convertible will offset losses from the drop in Franklin Convertible's long position.| Franklin Real vs. Realty Income | Franklin Real vs. Dynex Capital | Franklin Real vs. First Industrial Realty | Franklin Real vs. Healthcare Realty Trust |
| Franklin Convertible vs. Virtus Real Estate | Franklin Convertible vs. Franklin Real Estate | Franklin Convertible vs. Deutsche Real Estate | Franklin Convertible vs. Dunham Real Estate |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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