Correlation Between Transocean and Franklin Street

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

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

Diversification Opportunities for Transocean and Franklin Street

0.17

Correlation Coefficient

Transocean  Franklin Street

Average diversification

The 3 months correlation between Transocean and Franklin is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Transocean 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 Transocean 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 Transocean 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 Transocean i.e., Transocean and Franklin Street go up and down completely randomly.

Pair Corralation between Transocean and Franklin Street

Considering the 90-day investment horizon Transocean is expected to generate 1.46 times less return on investment than Franklin Street. In addition to that, Transocean is 1.07 times more volatile than Franklin Street Properties. It trades about 0.04 of its total potential returns per unit of risk. Franklin Street Properties is currently generating about 0.06 per unit of volatility. If you would invest  173.00  in Franklin Street Properties on September 4, 2024 and sell it today you would earn a total of  17.00  from holding Franklin Street Properties or generate 9.83% return on investment over 90 days.

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

Transocean  vs.  Franklin Street Properties

Transocean

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transocean are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Transocean may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Franklin Street Prop

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Street Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Franklin Street may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Transocean and Franklin Street

The main advantage of trading using opposite Transocean and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transocean 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 Transocean 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..