Correlation Between Franklin Real and Global Real
Can any of the company-specific risk be diversified away by investing in both Franklin Real and Global 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 Global 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 Global Real Estate, you can compare the effects of market volatilities on Franklin Real and Global 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 Global Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Global Real.
Diversification Opportunities for Franklin Real and Global Real
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Global is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Global Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global 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 Global Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Real Estate has no effect on the direction of Franklin Real i.e., Franklin Real and Global Real go up and down completely randomly.
Pair Corralation between Franklin Real and Global Real
Assuming the 90 days horizon Franklin Real Estate is expected to generate 1.11 times more return on investment than Global Real. However, Franklin Real is 1.11 times more volatile than Global Real Estate. It trades about 0.11 of its potential returns per unit of risk. Global Real Estate is currently generating about 0.08 per unit of risk. If you would invest 1,684 in Franklin Real Estate on September 19, 2024 and sell it today you would earn a total of 209.00 from holding Franklin Real Estate or generate 12.41% 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. Global Real Estate
Performance |
| Timeline |
| Franklin Real Estate |
| Global Real Estate |
Franklin Real and Global Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Global Real
The main advantage of trading using opposite Franklin Real and Global Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, Global 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 Global Real will offset losses from the drop in Global Real'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 |
| Global Real vs. Pender Real Estate | Global Real vs. Guggenheim Risk Managed | Global Real vs. Franklin Real Estate | Global Real vs. Columbia 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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