Correlation Between Franklin Electric and Altra Industrial
Can any of the company-specific risk be diversified away by investing in both Franklin Electric and Altra Industrial 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 Electric and Altra Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Electric Co and Altra Industrial Motion, you can compare the effects of market volatilities on Franklin Electric and Altra Industrial 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 Electric with a short position of Altra Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Altra Industrial.
Diversification Opportunities for Franklin Electric and Altra Industrial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Altra is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Altra Industrial Motion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altra Industrial Motion and Franklin Electric 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 Electric Co are associated (or correlated) with Altra Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altra Industrial Motion has no effect on the direction of Franklin Electric i.e., Franklin Electric and Altra Industrial go up and down completely randomly.
Pair Corralation between Franklin Electric and Altra Industrial
Given the investment horizon of 90 days Franklin Electric Co is expected to generate 4.62 times more return on investment than Altra Industrial. However, Franklin Electric is 4.62 times more volatile than Altra Industrial Motion. It trades about 0.05 of its potential returns per unit of risk. Altra Industrial Motion is currently generating about 0.18 per unit of risk. If you would invest 7,879 in Franklin Electric Co on August 29, 2024 and sell it today you would earn a total of 2,925 from holding Franklin Electric Co or generate 37.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 15.15% |
| Values | Daily Returns |
Franklin Electric Co vs. Altra Industrial Motion
Performance |
| Timeline |
| Franklin Electric |
| Altra Industrial Motion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Franklin Electric and Altra Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Electric and Altra Industrial
The main advantage of trading using opposite Franklin Electric and Altra Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric position performs unexpectedly, Altra Industrial 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 Altra Industrial will offset losses from the drop in Altra Industrial's long position.| Franklin Electric vs. Aquagold International | Franklin Electric vs. Morningstar Unconstrained Allocation | Franklin Electric vs. High Yield Municipal Fund | Franklin Electric vs. Thrivent High Yield |
| Altra Industrial vs. Franklin Electric Co | Altra Industrial vs. Donaldson | Altra Industrial vs. John Bean Technologies | Altra Industrial vs. ITT Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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