Correlation Between Deutsche Strategic and Franklin Real
Can any of the company-specific risk be diversified away by investing in both Deutsche Strategic 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 Deutsche Strategic and Franklin Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Strategic High and Franklin Real Estate, you can compare the effects of market volatilities on Deutsche Strategic 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 Deutsche Strategic with a short position of Franklin Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Strategic and Franklin Real.
Diversification Opportunities for Deutsche Strategic and Franklin Real
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deutsche and FRANKLIN is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Strategic High 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 Deutsche Strategic 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 Deutsche Strategic High 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 Deutsche Strategic i.e., Deutsche Strategic and Franklin Real go up and down completely randomly.
Pair Corralation between Deutsche Strategic and Franklin Real
Assuming the 90 days horizon Deutsche Strategic is expected to generate 3.17 times less return on investment than Franklin Real. But when comparing it to its historical volatility, Deutsche Strategic High is 2.97 times less risky than Franklin Real. It trades about 0.15 of its potential returns per unit of risk. Franklin Real Estate is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,677 in Franklin Real Estate on September 3, 2024 and sell it today you would earn a total of 310.00 from holding Franklin Real Estate or generate 18.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Strategic High vs. Franklin Real Estate
Performance |
| Timeline |
| Deutsche Strategic High |
| Franklin Real Estate |
Deutsche Strategic and Franklin Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Strategic and Franklin Real
The main advantage of trading using opposite Deutsche Strategic and Franklin Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Strategic 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.| Deutsche Strategic vs. Nuveen High Yield | Deutsche Strategic vs. Nuveen High Yield | Deutsche Strategic vs. Nuveen High Yield | Deutsche Strategic vs. American High Income Municipal |
| Franklin Real vs. Franklin Natural Resources | Franklin Real vs. Franklin Small Cap | Franklin Real vs. Templeton Developing Markets | Franklin Real vs. Franklin Balance Sheet |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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