Correlation Between Tradeweb Markets and Franklin BSP

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

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

Diversification Opportunities for Tradeweb Markets and Franklin BSP

-0.32

Correlation Coefficient

Tradeweb Markets  Franklin BSP

Very good diversification

The 3 months correlation between Tradeweb and Franklin is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and Franklin BSP Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin BSP Realty and Tradeweb Markets 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 Tradeweb Markets are associated (or correlated) with Franklin BSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin BSP Realty has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and Franklin BSP go up and down completely randomly.

Pair Corralation between Tradeweb Markets and Franklin BSP

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 0.92 times more return on investment than Franklin BSP. However, Tradeweb Markets is 1.09 times less risky than Franklin BSP. It trades about 0.1 of its potential returns per unit of risk. Franklin BSP Realty is currently generating about 0.03 per unit of risk. If you would invest  6,564  in Tradeweb Markets on September 19, 2024 and sell it today you would earn a total of  6,480  from holding Tradeweb Markets or generate 98.72% return on investment over 90 days.

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

Tradeweb Markets  vs.  Franklin BSP Realty

Tradeweb Markets

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tradeweb Markets may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tradeweb Markets and Franklin BSP

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

The idea behind Tradeweb Markets and Franklin BSP Realty 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 Stocks Directory module to find actively traded stocks across global markets.