Correlation Between American Axle and Franklin Wireless
Can any of the company-specific risk be diversified away by investing in both American Axle and Franklin Wireless 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 American Axle and Franklin Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Axle Manufacturing and Franklin Wireless Corp, you can compare the effects of market volatilities on American Axle and Franklin Wireless 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 American Axle with a short position of Franklin Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Franklin Wireless.
Diversification Opportunities for American Axle and Franklin Wireless
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Franklin is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp and American Axle 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 American Axle Manufacturing are associated (or correlated) with Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of American Axle i.e., American Axle and Franklin Wireless go up and down completely randomly.
Pair Corralation between American Axle and Franklin Wireless
Considering the 90-day investment horizon American Axle is expected to generate 1.82 times less return on investment than Franklin Wireless. In addition to that, American Axle is 1.15 times more volatile than Franklin Wireless Corp. It trades about 0.03 of its total potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.06 per unit of volatility. If you would invest 400.00 in Franklin Wireless Corp on August 29, 2024 and sell it today you would earn a total of 29.00 from holding Franklin Wireless Corp or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Franklin Wireless Corp
Performance |
| Timeline |
| American Axle Manufa |
| Franklin Wireless Corp |
American Axle and Franklin Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Franklin Wireless
The main advantage of trading using opposite American Axle and Franklin Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Franklin Wireless 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 Wireless will offset losses from the drop in Franklin Wireless' long position.| American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
| Franklin Wireless vs. Wialan Technologies | Franklin Wireless vs. TPT Global Tech | Franklin Wireless vs. Moving iMage Technologies | Franklin Wireless vs. Comtech Telecommunications Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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