Correlation Between Power REIT and Franklin Street
Can any of the company-specific risk be diversified away by investing in both Power REIT 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 Power REIT and Franklin Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Franklin Street Properties, you can compare the effects of market volatilities on Power REIT 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 Power REIT with a short position of Franklin Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Franklin Street.
Diversification Opportunities for Power REIT and Franklin Street
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Power and Franklin is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT 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 Power REIT 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 Power REIT 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 Power REIT i.e., Power REIT and Franklin Street go up and down completely randomly.
Pair Corralation between Power REIT and Franklin Street
Allowing for the 90-day total investment horizon Power REIT is expected to generate 3.06 times more return on investment than Franklin Street. However, Power REIT is 3.06 times more volatile than Franklin Street Properties. It trades about 0.04 of its potential returns per unit of risk. Franklin Street Properties is currently generating about 0.06 per unit of risk. If you would invest 131.00 in Power REIT on October 14, 2024 and sell it today you would earn a total of 2.00 from holding Power REIT or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power REIT vs. Franklin Street Properties
Performance |
| Timeline |
| Power REIT |
| Franklin Street Prop |
Power REIT and Franklin Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Franklin Street
The main advantage of trading using opposite Power REIT and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT 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.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
| Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Creative Media Community | Franklin Street vs. Highwoods Properties | Franklin Street vs. Douglas Emmett |
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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