Correlation Between Franklin Street and Realty Income
Can any of the company-specific risk be diversified away by investing in both Franklin Street and Realty Income 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 Realty Income 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 Realty Income, you can compare the effects of market volatilities on Franklin Street and Realty Income 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 Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Street and Realty Income.
Diversification Opportunities for Franklin Street and Realty Income
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Realty is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income 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 Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Franklin Street i.e., Franklin Street and Realty Income go up and down completely randomly.
Pair Corralation between Franklin Street and Realty Income
Considering the 90-day investment horizon Franklin Street Properties is expected to under-perform the Realty Income. In addition to that, Franklin Street is 1.39 times more volatile than Realty Income. It trades about -0.07 of its total potential returns per unit of risk. Realty Income is currently generating about 0.18 per unit of volatility. If you would invest 5,274 in Realty Income on October 22, 2024 and sell it today you would earn a total of 188.00 from holding Realty Income or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Street Properties vs. Realty Income
Performance |
| Timeline |
| Franklin Street Prop |
| Realty Income |
Franklin Street and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Street and Realty Income
The main advantage of trading using opposite Franklin Street and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Street position performs unexpectedly, Realty Income 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 Realty Income will offset losses from the drop in Realty Income's long position.| Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Creative Media Community | Franklin Street vs. Highwoods Properties | Franklin Street vs. Douglas Emmett |
| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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