Correlation Between Franklin Real and Sentinel Small
Can any of the company-specific risk be diversified away by investing in both Franklin Real and Sentinel Small 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 Sentinel Small 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 Sentinel Small, you can compare the effects of market volatilities on Franklin Real and Sentinel Small 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 Sentinel Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Sentinel Small.
Diversification Opportunities for Franklin Real and Sentinel Small
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Sentinel is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Sentinel Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Small 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 Sentinel Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Small has no effect on the direction of Franklin Real i.e., Franklin Real and Sentinel Small go up and down completely randomly.
Pair Corralation between Franklin Real and Sentinel Small
Assuming the 90 days horizon Franklin Real is expected to generate 1.7 times less return on investment than Sentinel Small. But when comparing it to its historical volatility, Franklin Real Estate is 1.03 times less risky than Sentinel Small. It trades about 0.06 of its potential returns per unit of risk. Sentinel Small is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 554.00 in Sentinel Small on September 2, 2024 and sell it today you would earn a total of 160.00 from holding Sentinel Small or generate 28.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. Sentinel Small
Performance |
| Timeline |
| Franklin Real Estate |
| Sentinel Small |
Franklin Real and Sentinel Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Sentinel Small
The main advantage of trading using opposite Franklin Real and Sentinel Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, Sentinel Small 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 Sentinel Small will offset losses from the drop in Sentinel Small'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 |
| Sentinel Small vs. Franklin Real Estate | Sentinel Small vs. Us Real Estate | Sentinel Small vs. Great West Real Estate | Sentinel Small vs. Msif 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 Stocks Directory module to find actively traded stocks across global markets.
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