Correlation Between Franklin Real and West Loop
Can any of the company-specific risk be diversified away by investing in both Franklin Real and West Loop 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 West Loop 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 West Loop Realty, you can compare the effects of market volatilities on Franklin Real and West Loop 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 West Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and West Loop.
Diversification Opportunities for Franklin Real and West Loop
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and West is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and West Loop Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Loop Realty 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 West Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Loop Realty has no effect on the direction of Franklin Real i.e., Franklin Real and West Loop go up and down completely randomly.
Pair Corralation between Franklin Real and West Loop
Assuming the 90 days horizon Franklin Real Estate is expected to generate 0.98 times more return on investment than West Loop. However, Franklin Real Estate is 1.02 times less risky than West Loop. It trades about 0.16 of its potential returns per unit of risk. West Loop Realty is currently generating about 0.16 per unit of risk. If you would invest 1,681 in Franklin Real Estate on September 2, 2024 and sell it today you would earn a total of 306.00 from holding Franklin Real Estate or generate 18.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. West Loop Realty
Performance |
| Timeline |
| Franklin Real Estate |
| West Loop Realty |
Franklin Real and West Loop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and West Loop
The main advantage of trading using opposite Franklin Real and West Loop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, West Loop 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 West Loop will offset losses from the drop in West Loop'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 |
| West Loop vs. Guggenheim Risk Managed | West Loop vs. Guggenheim Risk Managed | West Loop vs. Real Estate Fund | West Loop vs. Simt Managed Volatility |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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