Correlation Between Franklin Real and Locorr Market
Can any of the company-specific risk be diversified away by investing in both Franklin Real and Locorr Market 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 Locorr Market 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 Locorr Market Trend, you can compare the effects of market volatilities on Franklin Real and Locorr Market 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 Locorr Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Locorr Market.
Diversification Opportunities for Franklin Real and Locorr Market
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Locorr is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Locorr Market Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Market Trend 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 Locorr Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Market Trend has no effect on the direction of Franklin Real i.e., Franklin Real and Locorr Market go up and down completely randomly.
Pair Corralation between Franklin Real and Locorr Market
Assuming the 90 days horizon Franklin Real is expected to generate 1.01 times less return on investment than Locorr Market. In addition to that, Franklin Real is 1.32 times more volatile than Locorr Market Trend. It trades about 0.18 of its total potential returns per unit of risk. Locorr Market Trend is currently generating about 0.24 per unit of volatility. If you would invest 1,037 in Locorr Market Trend on September 1, 2024 and sell it today you would earn a total of 38.00 from holding Locorr Market Trend or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. Locorr Market Trend
Performance |
| Timeline |
| Franklin Real Estate |
| Locorr Market Trend |
Franklin Real and Locorr Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Locorr Market
The main advantage of trading using opposite Franklin Real and Locorr Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, Locorr Market 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 Locorr Market will offset losses from the drop in Locorr Market's long position.| Franklin Real vs. Franklin Natural Resources | Franklin Real vs. Franklin Small Cap | Franklin Real vs. Templeton Developing Markets | Franklin Real vs. Franklin Balance Sheet |
| Locorr Market vs. Msif Real Estate | Locorr Market vs. Jhancock Real Estate | Locorr Market vs. Deutsche Real Estate | Locorr Market vs. Franklin 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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