Correlation Between Piedmont Office and Franklin Street
Can any of the company-specific risk be diversified away by investing in both Piedmont Office and Franklin Street 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 Piedmont Office and Franklin Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Piedmont Office Realty and Franklin Street Properties, you can compare the effects of market volatilities on Piedmont Office and Franklin Street 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 Piedmont Office with a short position of Franklin Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piedmont Office and Franklin Street.
Diversification Opportunities for Piedmont Office and Franklin Street
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Piedmont and Franklin is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Piedmont Office Realty and Franklin Street Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Street Prop and Piedmont Office 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 Piedmont Office Realty are associated (or correlated) with Franklin Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Street Prop has no effect on the direction of Piedmont Office i.e., Piedmont Office and Franklin Street go up and down completely randomly.
Pair Corralation between Piedmont Office and Franklin Street
Considering the 90-day investment horizon Piedmont Office Realty is expected to under-perform the Franklin Street. But the stock apears to be less risky and, when comparing its historical volatility, Piedmont Office Realty is 2.71 times less risky than Franklin Street. The stock trades about -0.18 of its potential returns per unit of risk. The Franklin Street Properties is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 180.00 in Franklin Street Properties on August 27, 2024 and sell it today you would earn a total of 12.00 from holding Franklin Street Properties or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Piedmont Office Realty vs. Franklin Street Properties
Performance |
| Timeline |
| Piedmont Office Realty |
| Franklin Street Prop |
Piedmont Office and Franklin Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Piedmont Office and Franklin Street
The main advantage of trading using opposite Piedmont Office and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Piedmont Office position performs unexpectedly, Franklin Street 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 Street will offset losses from the drop in Franklin Street's long position.| Piedmont Office vs. Highwoods Properties | Piedmont Office vs. Douglas Emmett | Piedmont Office vs. Kilroy Realty Corp | Piedmont Office vs. Cousins Properties Incorporated |
| Franklin Street vs. Equity Commonwealth | Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Creative Media Community | Franklin Street vs. Highwoods Properties |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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