Correlation Between Ventas and Franklin Street

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

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

Diversification Opportunities for Ventas and Franklin Street

-0.24

Correlation Coefficient

Ventas  Franklin Street

Very good diversification

The 3 months correlation between Ventas and Franklin is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ventas Inc 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 Ventas 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 Ventas Inc 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 Ventas i.e., Ventas and Franklin Street go up and down completely randomly.

Pair Corralation between Ventas and Franklin Street

Considering the 90-day investment horizon Ventas Inc is expected to under-perform the Franklin Street. But the stock apears to be less risky and, when comparing its historical volatility, Ventas Inc is 3.04 times less risky than Franklin Street. The stock trades about -0.25 of its potential returns per unit of risk. The Franklin Street Properties is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  183.00  in Franklin Street Properties on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Franklin Street Properties or generate 0.0% return on investment over 90 days.

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

Ventas Inc  vs.  Franklin Street Properties

Ventas Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Franklin Street Prop

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Street Properties are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Franklin Street reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ventas and Franklin Street

The main advantage of trading using opposite Ventas and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ventas 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 Ventas Inc 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 CEOs Directory module to screen CEOs from public companies around the world.