Correlation Between Franklin Street and CoStar

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

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

Diversification Opportunities for Franklin Street and CoStar

-0.76

Correlation Coefficient

Franklin Street  CoStar

Pay attention - limited upside

The 3 months correlation between Franklin and CoStar is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group and Franklin Street 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 Street Properties are associated (or correlated) with CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of Franklin Street i.e., Franklin Street and CoStar go up and down completely randomly.

Pair Corralation between Franklin Street and CoStar

Considering the 90-day investment horizon Franklin Street Properties is expected to under-perform the CoStar. In addition to that, Franklin Street is 1.34 times more volatile than CoStar Group. It trades about -0.08 of its total potential returns per unit of risk. CoStar Group is currently generating about 0.19 per unit of volatility. If you would invest  7,396  in CoStar Group on May 21, 2025 and sell it today you would earn a total of  1,420  from holding CoStar Group or generate 19.2% return on investment over 90 days.

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

Franklin Street Properties  vs.  CoStar Group

Franklin Street Prop

Risk-Adjusted Performance

Weakest

Over the last 90 days Franklin Street Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

CoStar Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, CoStar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Street and CoStar

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

The idea behind Franklin Street Properties and CoStar Group 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.