Correlation Between Franklin Real and Government Long
Can any of the company-specific risk be diversified away by investing in both Franklin Real and Government Long 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 Government Long 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 Government Long Bond, you can compare the effects of market volatilities on Franklin Real and Government Long 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 Government Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Government Long.
Diversification Opportunities for Franklin Real and Government Long
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Government is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Government Long Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Long Bond 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 Government Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Long Bond has no effect on the direction of Franklin Real i.e., Franklin Real and Government Long go up and down completely randomly.
Pair Corralation between Franklin Real and Government Long
Assuming the 90 days horizon Franklin Real Estate is expected to generate 0.72 times more return on investment than Government Long. However, Franklin Real Estate is 1.39 times less risky than Government Long. It trades about 0.12 of its potential returns per unit of risk. Government Long Bond is currently generating about 0.06 per unit of risk. If you would invest 1,946 in Franklin Real Estate on August 30, 2024 and sell it today you would earn a total of 52.00 from holding Franklin Real Estate or generate 2.67% 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. Government Long Bond
Performance |
| Timeline |
| Franklin Real Estate |
| Government Long Bond |
Franklin Real and Government Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Government Long
The main advantage of trading using opposite Franklin Real and Government Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, Government Long 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 Government Long will offset losses from the drop in Government Long's long position.| Franklin Real vs. Franklin Natural Resources | Franklin Real vs. HUMANA INC | Franklin Real vs. Aquagold International | Franklin Real vs. Barloworld Ltd ADR |
| Government Long vs. T Rowe Price | Government Long vs. Arrow Managed Futures | Government Long vs. Artisan Emerging Markets | Government Long vs. Touchstone Sands Capital |
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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