Correlation Between Franklin Street and Lion One

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

By analyzing existing cross correlation between Franklin Street Properties and Lion One Metals, you can compare the effects of market volatilities on Franklin Street and Lion One 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 Street with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Street and Lion One.

Diversification Opportunities for Franklin Street and Lion One

-0.34

Correlation Coefficient

Franklin Street  Lion One

Very good diversification

The 3 months correlation between Franklin and Lion is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Franklin Street 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 Street Properties are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Franklin Street i.e., Franklin Street and Lion One go up and down completely randomly.

Pair Corralation between Franklin Street and Lion One

Considering the 90-day investment horizon Franklin Street Properties is expected to generate 0.42 times more return on investment than Lion One. However, Franklin Street Properties is 2.39 times less risky than Lion One. It trades about 0.09 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.3 per unit of risk. If you would invest  181.00  in Franklin Street Properties on December 2, 2024 and sell it today you would earn a total of  7.00  from holding Franklin Street Properties or generate 3.87% return on investment over 90 days.

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

Franklin Street Properties  vs.  Lion One Metals

Franklin Street Prop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Street Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Franklin Street is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Lion One Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Franklin Street and Lion One

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

The idea behind Franklin Street Properties and Lion One Metals 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.