Correlation Between Madison High and Franklin Real
Can any of the company-specific risk be diversified away by investing in both Madison High and Franklin Real 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 Madison High and Franklin Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison High Quality and Franklin Real Estate, you can compare the effects of market volatilities on Madison High and Franklin Real 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 Madison High with a short position of Franklin Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison High and Franklin Real.
Diversification Opportunities for Madison High and Franklin Real
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Madison and Franklin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Madison High Quality and Franklin Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Real Estate and Madison High 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 Madison High Quality are associated (or correlated) with Franklin Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Real Estate has no effect on the direction of Madison High i.e., Madison High and Franklin Real go up and down completely randomly.
Pair Corralation between Madison High and Franklin Real
Assuming the 90 days horizon Madison High is expected to generate 6.59 times less return on investment than Franklin Real. But when comparing it to its historical volatility, Madison High Quality is 5.32 times less risky than Franklin Real. It trades about 0.17 of its potential returns per unit of risk. Franklin Real Estate is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,951 in Franklin Real Estate on September 3, 2024 and sell it today you would earn a total of 74.00 from holding Franklin Real Estate or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison High Quality vs. Franklin Real Estate
Performance |
| Timeline |
| Madison High Quality |
| Franklin Real Estate |
Madison High and Franklin Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison High and Franklin Real
The main advantage of trading using opposite Madison High and Franklin Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison High position performs unexpectedly, Franklin Real 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 Franklin Real will offset losses from the drop in Franklin Real's long position.| Madison High vs. Prudential Real Estate | Madison High vs. Great West Real Estate | Madison High vs. Commonwealth Real Estate | Madison High vs. Guggenheim Risk Managed |
| Franklin Real vs. Vanguard Reit Index | Franklin Real vs. Vanguard Reit Index | Franklin Real vs. Vanguard Reit Index | Franklin Real vs. Dfa Real Estate |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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