Correlation Between Franklin Electric and ATS
Can any of the company-specific risk be diversified away by investing in both Franklin Electric and ATS 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 ATS 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 ATS Corporation, you can compare the effects of market volatilities on Franklin Electric and ATS 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 ATS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and ATS.
Diversification Opportunities for Franklin Electric and ATS
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and ATS is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and ATS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATS Corporation 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 ATS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATS Corporation has no effect on the direction of Franklin Electric i.e., Franklin Electric and ATS go up and down completely randomly.
Pair Corralation between Franklin Electric and ATS
Given the investment horizon of 90 days Franklin Electric Co is expected to generate 0.74 times more return on investment than ATS. However, Franklin Electric Co is 1.35 times less risky than ATS. It trades about 0.05 of its potential returns per unit of risk. ATS Corporation is currently generating about 0.01 per unit of risk. If you would invest 8,009 in Franklin Electric Co on September 2, 2024 and sell it today you would earn a total of 2,821 from holding Franklin Electric Co or generate 35.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Electric Co vs. ATS Corp.
Performance |
| Timeline |
| Franklin Electric |
| ATS Corporation |
Franklin Electric and ATS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Electric and ATS
The main advantage of trading using opposite Franklin Electric and ATS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric position performs unexpectedly, ATS 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 ATS will offset losses from the drop in ATS's long position.The idea behind Franklin Electric Co and ATS Corporation 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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