Correlation Between Franklin Street and Transocean
Can any of the company-specific risk be diversified away by investing in both Franklin Street and Transocean 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 Transocean 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 Transocean, you can compare the effects of market volatilities on Franklin Street and Transocean 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 Transocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Street and Transocean.
Diversification Opportunities for Franklin Street and Transocean
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Transocean is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Franklin Street i.e., Franklin Street and Transocean go up and down completely randomly.
Pair Corralation between Franklin Street and Transocean
Considering the 90-day investment horizon Franklin Street Properties is expected to generate 1.18 times more return on investment than Transocean. However, Franklin Street is 1.18 times more volatile than Transocean. It trades about 0.12 of its potential returns per unit of risk. Transocean is currently generating about 0.04 per unit of risk. If you would invest 177.00 in Franklin Street Properties on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Franklin Street Properties or generate 7.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Street Properties vs. Transocean
Performance |
| Timeline |
| Franklin Street Prop |
| Transocean |
Franklin Street and Transocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Street and Transocean
The main advantage of trading using opposite Franklin Street and Transocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Street position performs unexpectedly, Transocean 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 Transocean will offset losses from the drop in Transocean's long position.| Franklin Street vs. Douglas Emmett | Franklin Street vs. Alexandria Real Estate | Franklin Street vs. Vornado Realty Trust | Franklin Street vs. Highwoods Properties |
| Transocean vs. Borr Drilling | Transocean vs. Patterson UTI Energy | Transocean vs. Noble plc | Transocean vs. Helmerich and Payne |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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