Correlation Between Franklin Real and Shelton Core

Can any of the company-specific risk be diversified away by investing in both Franklin Real and Shelton Core 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 Shelton Core 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 Shelton E Value, you can compare the effects of market volatilities on Franklin Real and Shelton Core 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 Shelton Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Shelton Core.

Diversification Opportunities for Franklin Real and Shelton Core

0.04

Correlation Coefficient

Franklin Real  Shelton Core

Significant diversification

The 3 months correlation between Franklin and Shelton is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Shelton E Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton E Value 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 Shelton Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton E Value has no effect on the direction of Franklin Real i.e., Franklin Real and Shelton Core go up and down completely randomly.

Pair Corralation between Franklin Real and Shelton Core

Assuming the 90 days horizon Franklin Real Estate is expected to generate 1.31 times more return on investment than Shelton Core. However, Franklin Real is 1.31 times more volatile than Shelton E Value. It trades about 0.05 of its potential returns per unit of risk. Shelton E Value is currently generating about -0.08 per unit of risk. If you would invest  1,670  in Franklin Real Estate on December 30, 2024 and sell it today you would earn a total of  49.00  from holding Franklin Real Estate or generate 2.93% return on investment over 90 days.

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

Franklin Real Estate  vs.  Shelton E Value

Franklin Real Estate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Real Estate are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shelton E Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shelton E Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Shelton Core 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 Shelton Core

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

The idea behind Franklin Real Estate and Shelton E Value 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.