Correlation Between Realty Income and Franklin Real
Can any of the company-specific risk be diversified away by investing in both Realty Income 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 Realty Income and Franklin Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and Franklin Real Estate, you can compare the effects of market volatilities on Realty Income 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 Realty Income with a short position of Franklin Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Franklin Real.
Diversification Opportunities for Realty Income and Franklin Real
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Realty and Franklin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income 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 Realty Income 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 Realty Income 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 Realty Income i.e., Realty Income and Franklin Real go up and down completely randomly.
Pair Corralation between Realty Income and Franklin Real
Taking into account the 90-day investment horizon Realty Income is expected to under-perform the Franklin Real. In addition to that, Realty Income is 1.05 times more volatile than Franklin Real Estate. It trades about -0.16 of its total potential returns per unit of risk. Franklin Real Estate is currently generating about -0.06 per unit of volatility. If you would invest 1,971 in Franklin Real Estate on September 12, 2024 and sell it today you would lose (21.00) from holding Franklin Real Estate or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Realty Income vs. Franklin Real Estate
Performance |
| Timeline |
| Realty Income |
| Franklin Real Estate |
Realty Income and Franklin Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and Franklin Real
The main advantage of trading using opposite Realty Income and Franklin Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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.| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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