Correlation Between Franklin BSP and Granite Point

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

By analyzing existing cross correlation between Franklin BSP Realty and Granite Point Mortgage, you can compare the effects of market volatilities on Franklin BSP and Granite Point 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 BSP with a short position of Granite Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin BSP and Granite Point.

Diversification Opportunities for Franklin BSP and Granite Point

0.28

Correlation Coefficient

Franklin BSP  Granite Point

Modest diversification

The 3 months correlation between Franklin and Granite is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Franklin BSP Realty and Granite Point Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Point Mortgage and Franklin BSP 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 BSP Realty are associated (or correlated) with Granite Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Point Mortgage has no effect on the direction of Franklin BSP i.e., Franklin BSP and Granite Point go up and down completely randomly.

Pair Corralation between Franklin BSP and Granite Point

Given the investment horizon of 90 days Franklin BSP Realty is expected to generate 0.46 times more return on investment than Granite Point. However, Franklin BSP Realty is 2.18 times less risky than Granite Point. It trades about -0.04 of its potential returns per unit of risk. Granite Point Mortgage is currently generating about -0.02 per unit of risk. If you would invest  1,314  in Franklin BSP Realty on September 24, 2024 and sell it today you would lose (47.00) from holding Franklin BSP Realty or give up 3.58% of portfolio value over 90 days.

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

Franklin BSP Realty  vs.  Granite Point Mortgage

Franklin BSP Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin BSP Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Franklin BSP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Granite Point Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Granite Point Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Granite Point is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Franklin BSP and Granite Point

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

The idea behind Franklin BSP Realty and Granite Point Mortgage 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 Commodity Directory module to find actively traded commodities issued by global exchanges.