Correlation Between Real Estate and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Real Estate and Franklin Convertible 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 Real Estate and Franklin Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Estate Ultrasector and Franklin Vertible Securities, you can compare the effects of market volatilities on Real Estate and Franklin Convertible 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 Real Estate with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and Franklin Convertible.
Diversification Opportunities for Real Estate and Franklin Convertible
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Real and Franklin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Ultrasector and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible and Real Estate 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 Real Estate Ultrasector are associated (or correlated) with Franklin Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of Real Estate i.e., Real Estate and Franklin Convertible go up and down completely randomly.
Pair Corralation between Real Estate and Franklin Convertible
Assuming the 90 days horizon Real Estate Ultrasector is expected to generate 3.0 times more return on investment than Franklin Convertible. However, Real Estate is 3.0 times more volatile than Franklin Vertible Securities. It trades about 0.07 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.16 per unit of risk. If you would invest 3,721 in Real Estate Ultrasector on September 4, 2024 and sell it today you would earn a total of 1,083 from holding Real Estate Ultrasector or generate 29.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Estate Ultrasector vs. Franklin Vertible Securities
Performance |
| Timeline |
| Real Estate Ultrasector |
| Franklin Convertible |
Real Estate and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Estate and Franklin Convertible
The main advantage of trading using opposite Real Estate and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate position performs unexpectedly, Franklin Convertible 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 Convertible will offset losses from the drop in Franklin Convertible's long position.| Real Estate vs. Davis Financial Fund | Real Estate vs. Mesirow Financial Small | Real Estate vs. Goldman Sachs Financial | Real Estate vs. Royce Global Financial |
| Franklin Convertible vs. Columbia Real Estate | Franklin Convertible vs. Commonwealth Real Estate | Franklin Convertible vs. Real Estate Ultrasector | Franklin Convertible vs. Guggenheim Risk Managed |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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