Correlation Between Sirius and Franklin Street

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

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

Diversification Opportunities for Sirius and Franklin Street

-0.4

Correlation Coefficient

Sirius  Franklin Street

Very good diversification

The 3 months correlation between Sirius and Franklin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sirius XM Holdings 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 Sirius 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 Sirius XM Holdings 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 Sirius i.e., Sirius and Franklin Street go up and down completely randomly.

Pair Corralation between Sirius and Franklin Street

Assuming the 90 days trading horizon Sirius XM Holdings is expected to generate 0.22 times more return on investment than Franklin Street. However, Sirius XM Holdings is 4.64 times less risky than Franklin Street. It trades about 0.04 of its potential returns per unit of risk. Franklin Street Properties is currently generating about -0.03 per unit of risk. If you would invest  8,495  in Sirius XM Holdings on September 28, 2024 and sell it today you would earn a total of  535.00  from holding Sirius XM Holdings or generate 6.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.26%
Values	Daily Returns

Sirius XM Holdings  vs.  Franklin Street Properties

Sirius XM Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sirius XM Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sirius is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Franklin Street Prop

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Street Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Franklin Street may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sirius and Franklin Street

The main advantage of trading using opposite Sirius and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sirius 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 Sirius XM Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.