Correlation Between Franklin Street and Equity Commonwealth
Can any of the company-specific risk be diversified away by investing in both Franklin Street and Equity Commonwealth 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 Street and Equity Commonwealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Street Properties and Equity Commonwealth, you can compare the effects of market volatilities on Franklin Street and Equity Commonwealth 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 Street with a short position of Equity Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Street and Equity Commonwealth.
Diversification Opportunities for Franklin Street and Equity Commonwealth
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Equity is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties and Equity Commonwealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Commonwealth and Franklin Street 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 Street Properties are associated (or correlated) with Equity Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Commonwealth has no effect on the direction of Franklin Street i.e., Franklin Street and Equity Commonwealth go up and down completely randomly.
Pair Corralation between Franklin Street and Equity Commonwealth
Considering the 90-day investment horizon Franklin Street Properties is expected to generate 13.86 times more return on investment than Equity Commonwealth. However, Franklin Street is 13.86 times more volatile than Equity Commonwealth. It trades about 0.02 of its potential returns per unit of risk. Equity Commonwealth is currently generating about 0.14 per unit of risk. If you would invest 189.00 in Franklin Street Properties on August 24, 2024 and sell it today you would earn a total of 6.00 from holding Franklin Street Properties or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Street Properties vs. Equity Commonwealth
Performance |
| Timeline |
| Franklin Street Prop |
| Equity Commonwealth |
Franklin Street and Equity Commonwealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Street and Equity Commonwealth
The main advantage of trading using opposite Franklin Street and Equity Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Street position performs unexpectedly, Equity Commonwealth 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 Equity Commonwealth will offset losses from the drop in Equity Commonwealth's long position.| Franklin Street vs. Equity Commonwealth | Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Creative Media Community | Franklin Street vs. Highwoods Properties |
| Equity Commonwealth vs. Cousins Properties Incorporated | Equity Commonwealth vs. Franklin Street Properties | Equity Commonwealth vs. Creative Media Community | Equity Commonwealth vs. Vornado Realty Trust |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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