Correlation Between Smith Douglas and Franklin Street
Can any of the company-specific risk be diversified away by investing in both Smith Douglas 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 Smith Douglas and Franklin Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Douglas Homes and Franklin Street Properties, you can compare the effects of market volatilities on Smith Douglas 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 Smith Douglas with a short position of Franklin Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Douglas and Franklin Street.
Diversification Opportunities for Smith Douglas and Franklin Street
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Smith and Franklin is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Smith Douglas Homes 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 Smith Douglas 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 Smith Douglas Homes 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 Smith Douglas i.e., Smith Douglas and Franklin Street go up and down completely randomly.
Pair Corralation between Smith Douglas and Franklin Street
Given the investment horizon of 90 days Smith Douglas Homes is expected to under-perform the Franklin Street. But the stock apears to be less risky and, when comparing its historical volatility, Smith Douglas Homes is 1.04 times less risky than Franklin Street. The stock trades about -0.01 of its potential returns per unit of risk. The Franklin Street Properties is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 180.00 in Franklin Street Properties on August 25, 2024 and sell it today you would earn a total of 14.00 from holding Franklin Street Properties or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith Douglas Homes vs. Franklin Street Properties
Performance |
| Timeline |
| Smith Douglas Homes |
| Franklin Street Prop |
Smith Douglas and Franklin Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Douglas and Franklin Street
The main advantage of trading using opposite Smith Douglas and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Douglas 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.| Smith Douglas vs. CF Industries Holdings | Smith Douglas vs. Hudson Technologies | Smith Douglas vs. Ryanair Holdings PLC | Smith Douglas vs. Grupo Aeroportuario del |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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