Correlation Between Franklin Natural and Real Estate
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Real Estate 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 Natural and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Natural Resources and Real Estate Securities, you can compare the effects of market volatilities on Franklin Natural and Real Estate 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 Natural with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Real Estate.
Diversification Opportunities for Franklin Natural and Real Estate
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Real is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Real Estate Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Securities and Franklin Natural 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 Natural Resources are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Securities has no effect on the direction of Franklin Natural i.e., Franklin Natural and Real Estate go up and down completely randomly.
Pair Corralation between Franklin Natural and Real Estate
Assuming the 90 days horizon Franklin Natural is expected to generate 1.33 times less return on investment than Real Estate. In addition to that, Franklin Natural is 1.04 times more volatile than Real Estate Securities. It trades about 0.03 of its total potential returns per unit of risk. Real Estate Securities is currently generating about 0.04 per unit of volatility. If you would invest 2,509 in Real Estate Securities on September 2, 2024 and sell it today you would earn a total of 584.00 from holding Real Estate Securities or generate 23.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Real Estate Securities
Performance |
| Timeline |
| Franklin Natural Res |
| Real Estate Securities |
Franklin Natural and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Real Estate
The main advantage of trading using opposite Franklin Natural and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.| Franklin Natural vs. Legg Mason Bw | Franklin Natural vs. Qs Large Cap | Franklin Natural vs. Dodge Cox Stock | Franklin Natural vs. Fidelity Series 1000 |
| Real Estate vs. Jhancock Short Duration | Real Estate vs. Ultra Short Fixed Income | Real Estate vs. Old Westbury Short Term | Real Estate vs. Angel Oak Ultrashort |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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