Correlation Between Franklin Covey and AMREP

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Can any of the company-specific risk be diversified away by investing in both Franklin Covey and AMREP 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 Covey and AMREP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Covey and AMREP, you can compare the effects of market volatilities on Franklin Covey and AMREP 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 Covey with a short position of AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Covey and AMREP.

Diversification Opportunities for Franklin Covey and AMREP

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Franklin and AMREP is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and Franklin Covey 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 Covey are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Franklin Covey i.e., Franklin Covey and AMREP go up and down completely randomly.

Pair Corralation between Franklin Covey and AMREP

Allowing for the 90-day total investment horizon Franklin Covey is expected to under-perform the AMREP. But the stock apears to be less risky and, when comparing its historical volatility, Franklin Covey is 2.35 times less risky than AMREP. The stock trades about -0.17 of its potential returns per unit of risk. The AMREP is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,558  in AMREP on September 13, 2024 and sell it today you would earn a total of  42.00  from holding AMREP or generate 1.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Franklin Covey  vs.  AMREP

 Performance 
       Timeline  
Franklin Covey 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Franklin Covey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Franklin Covey is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
AMREP 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in AMREP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AMREP reported solid returns over the last few months and may actually be approaching a breakup point.

Franklin Covey and AMREP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Covey and AMREP

The main advantage of trading using opposite Franklin Covey and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Covey position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.
The idea behind Franklin Covey and AMREP 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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