Correlation Between Sable Offshore and Franklin Street

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

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

Diversification Opportunities for Sable Offshore and Franklin Street

0.31

Correlation Coefficient

Sable Offshore  Franklin Street

Weak diversification

The 3 months correlation between Sable and Franklin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp 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 Sable Offshore 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 Sable Offshore Corp 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 Sable Offshore i.e., Sable Offshore and Franklin Street go up and down completely randomly.

Pair Corralation between Sable Offshore and Franklin Street

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 2.56 times more return on investment than Franklin Street. However, Sable Offshore is 2.56 times more volatile than Franklin Street Properties. It trades about 0.02 of its potential returns per unit of risk. Franklin Street Properties is currently generating about 0.04 per unit of risk. If you would invest  2,276  in Sable Offshore Corp on December 11, 2024 and sell it today you would lose (13.00) from holding Sable Offshore Corp or give up 0.57% of portfolio value over 90 days.

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

Sable Offshore Corp  vs.  Franklin Street Properties

Sable Offshore Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Offshore Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Sable Offshore exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Sable Offshore and Franklin Street

The main advantage of trading using opposite Sable Offshore and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore 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.

The idea behind Sable Offshore Corp and Franklin Street Properties 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 Valuation module to check real value of public entities based on technical and fundamental data.