Correlation Between Franklin Real and Angel Oak

Can any of the company-specific risk be diversified away by investing in both Franklin Real and Angel Oak 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 Franklin Real and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Real Estate and Angel Oak Ultrashort, you can compare the effects of market volatilities on Franklin Real and Angel Oak 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 Franklin Real with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Angel Oak.

Diversification Opportunities for Franklin Real and Angel Oak

-0.25

Correlation Coefficient

Franklin Real  Angel Oak

Very good diversification

The 3 months correlation between Franklin and Angel is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Angel Oak Ultrashort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Ultrashort and Franklin Real 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 Franklin Real Estate are associated (or correlated) with Angel Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel Oak Ultrashort has no effect on the direction of Franklin Real i.e., Franklin Real and Angel Oak go up and down completely randomly.

Pair Corralation between Franklin Real and Angel Oak

Assuming the 90 days horizon Franklin Real is expected to generate 26.67 times less return on investment than Angel Oak. In addition to that, Franklin Real is 10.94 times more volatile than Angel Oak Ultrashort. It trades about 0.0 of its total potential returns per unit of risk. Angel Oak Ultrashort is currently generating about 0.22 per unit of volatility. If you would invest  872.00  in Angel Oak Ultrashort on September 30, 2024 and sell it today you would earn a total of  110.00  from holding Angel Oak Ultrashort or generate 12.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Franklin Real Estate  vs.  Angel Oak Ultrashort

Franklin Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of unfluctuating performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Angel Oak Ultrashort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Angel Oak Ultrashort has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Angel Oak is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Real and Angel Oak

The main advantage of trading using opposite Franklin Real and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, Angel Oak 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 Angel Oak will offset losses from the drop in Angel Oak's long position.

The idea behind Franklin Real Estate and Angel Oak Ultrashort pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.