Correlation Between Franklin Real and State Street
Can any of the company-specific risk be diversified away by investing in both Franklin Real and State Street 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 State Street 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 State Street Global, you can compare the effects of market volatilities on Franklin Real and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and State Street.
Diversification Opportunities for Franklin Real and State Street
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and State is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and State Street Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Global 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Global has no effect on the direction of Franklin Real i.e., Franklin Real and State Street go up and down completely randomly.
Pair Corralation between Franklin Real and State Street
Assuming the 90 days horizon Franklin Real Estate is expected to generate 1.48 times more return on investment than State Street. However, Franklin Real is 1.48 times more volatile than State Street Global. It trades about 0.3 of its potential returns per unit of risk. State Street Global is currently generating about 0.4 per unit of risk. If you would invest 1,621 in Franklin Real Estate on November 11, 2024 and sell it today you would earn a total of 104.00 from holding Franklin Real Estate or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. State Street Global
Performance |
| Timeline |
| Franklin Real Estate |
| State Street Global |
Franklin Real and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and State Street
The main advantage of trading using opposite Franklin Real and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Franklin Real vs. Franklin Federal Limited Term | Franklin Real vs. Old Westbury Short Term | Franklin Real vs. Barings Active Short | Franklin Real vs. Siit Ultra Short |
| State Street vs. T Rowe Price | State Street vs. Rbc Ultra Short Fixed | State Street vs. Multisector Bond Sma | State Street 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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