Correlation Between Redwood Real and Franklin Real
Can any of the company-specific risk be diversified away by investing in both Redwood Real and Franklin Real 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 Redwood Real and Franklin Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwood Real Estate and Franklin Real Estate, you can compare the effects of market volatilities on Redwood Real and Franklin Real 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 Redwood Real with a short position of Franklin Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Real and Franklin Real.
Diversification Opportunities for Redwood Real and Franklin Real
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Redwood and Franklin is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Real Estate and Franklin Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Real Estate and Redwood Real 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 Redwood Real Estate are associated (or correlated) with Franklin Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Real Estate has no effect on the direction of Redwood Real i.e., Redwood Real and Franklin Real go up and down completely randomly.
Pair Corralation between Redwood Real and Franklin Real
Assuming the 90 days horizon Redwood Real Estate is expected to generate 0.03 times more return on investment than Franklin Real. However, Redwood Real Estate is 29.87 times less risky than Franklin Real. It trades about 1.14 of its potential returns per unit of risk. Franklin Real Estate is currently generating about -0.01 per unit of risk. If you would invest 2,464 in Redwood Real Estate on September 6, 2025 and sell it today you would earn a total of 46.00 from holding Redwood Real Estate or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Redwood Real Estate vs. Franklin Real Estate
Performance |
| Timeline |
| Redwood Real Estate |
| Franklin Real Estate |
Redwood Real and Franklin Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwood Real and Franklin Real
The main advantage of trading using opposite Redwood Real and Franklin Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Real position performs unexpectedly, Franklin Real 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 Real will offset losses from the drop in Franklin Real's long position.| Redwood Real vs. Franklin California High | Redwood Real vs. Transamerica High Yield | Redwood Real vs. Vanguard High Yield Tax Exempt | Redwood Real vs. Needham Aggressive Growth |
| Franklin Real vs. Vanguard Energy Index | Franklin Real vs. Global Resources Fund | Franklin Real vs. Firsthand Alternative Energy | Franklin Real vs. Ivy Natural Resources |
Check out your portfolio center.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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