Correlation Between Franklin Street and INGEVITY

Can any of the company-specific risk be diversified away by investing in both Franklin Street and INGEVITY 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 INGEVITY 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 INGEVITY P 3875, you can compare the effects of market volatilities on Franklin Street and INGEVITY 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 INGEVITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Street and INGEVITY.

Diversification Opportunities for Franklin Street and INGEVITY

-0.32

Correlation Coefficient

Franklin Street  INGEVITY

Very good diversification

The 3 months correlation between Franklin and INGEVITY is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties and INGEVITY P 3875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGEVITY P 3875 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 INGEVITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGEVITY P 3875 has no effect on the direction of Franklin Street i.e., Franklin Street and INGEVITY go up and down completely randomly.

Pair Corralation between Franklin Street and INGEVITY

Considering the 90-day investment horizon Franklin Street Properties is expected to generate 4.23 times more return on investment than INGEVITY. However, Franklin Street is 4.23 times more volatile than INGEVITY P 3875. It trades about 0.02 of its potential returns per unit of risk. INGEVITY P 3875 is currently generating about -0.04 per unit of risk. If you would invest  184.00  in Franklin Street Properties on September 27, 2024 and sell it today you would earn a total of  5.00  from holding Franklin Street Properties or generate 2.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.88%
Values	Daily Returns

Franklin Street Properties  vs.  INGEVITY P 3875

Franklin Street Prop

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Street Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Franklin Street reported solid returns over the last few months and may actually be approaching a breakup point.

INGEVITY P 3875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGEVITY P 3875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INGEVITY P 3875 investors.

Pair Trading with Franklin Street and INGEVITY

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

The idea behind Franklin Street Properties and INGEVITY P 3875 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.