Correlation Between Franklin Real and Virtus Real
Can any of the company-specific risk be diversified away by investing in both Franklin Real 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 Real 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 Real Estate and Virtus Real Estate, you can compare the effects of market volatilities on Franklin Real 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 Real with a short position of Virtus Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Virtus Real.
Diversification Opportunities for Franklin Real and Virtus Real
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Virtus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate 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 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 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 Real i.e., Franklin Real and Virtus Real go up and down completely randomly.
Pair Corralation between Franklin Real and Virtus Real
Assuming the 90 days horizon Franklin Real is expected to generate 1.19 times less return on investment than Virtus Real. But when comparing it to its historical volatility, Franklin Real Estate is 1.02 times less risky than Virtus Real. It trades about 0.17 of its potential returns per unit of risk. Virtus Real Estate is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,722 in Virtus Real Estate on August 25, 2024 and sell it today you would earn a total of 420.00 from holding Virtus Real Estate or generate 24.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. Virtus Real Estate
Performance |
| Timeline |
| Franklin Real Estate |
| Virtus Real Estate |
Franklin Real and Virtus Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Virtus Real
The main advantage of trading using opposite Franklin Real and Virtus Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real 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 Real vs. Franklin Natural Resources | Franklin Real vs. Franklin Small Cap | Franklin Real vs. Templeton Developing Markets | Franklin Real vs. Franklin Balance Sheet |
| Virtus Real vs. T Rowe Price | Virtus Real vs. Pace Municipal Fixed | Virtus Real vs. T Rowe Price | Virtus Real vs. Franklin High Yield |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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