Correlation Between Franklin Electric and Crane NXT
Can any of the company-specific risk be diversified away by investing in both Franklin Electric and Crane NXT 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 Crane NXT 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 Crane NXT Co, you can compare the effects of market volatilities on Franklin Electric and Crane NXT 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 Crane NXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Crane NXT.
Diversification Opportunities for Franklin Electric and Crane NXT
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Crane is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Crane NXT Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane NXT 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 Crane NXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane NXT has no effect on the direction of Franklin Electric i.e., Franklin Electric and Crane NXT go up and down completely randomly.
Pair Corralation between Franklin Electric and Crane NXT
Given the investment horizon of 90 days Franklin Electric Co is expected to under-perform the Crane NXT. In addition to that, Franklin Electric is 1.22 times more volatile than Crane NXT Co. It trades about -0.02 of its total potential returns per unit of risk. Crane NXT Co is currently generating about 0.18 per unit of volatility. If you would invest 5,553 in Crane NXT Co on October 26, 2024 and sell it today you would earn a total of 979.00 from holding Crane NXT Co or generate 17.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Electric Co vs. Crane NXT Co
Performance |
| Timeline |
| Franklin Electric |
| Crane NXT |
Franklin Electric and Crane NXT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Electric and Crane NXT
The main advantage of trading using opposite Franklin Electric and Crane NXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric position performs unexpectedly, Crane NXT 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 Crane NXT will offset losses from the drop in Crane NXT's long position.| Franklin Electric vs. Graco Inc | Franklin Electric vs. Ametek Inc | Franklin Electric vs. Flowserve | Franklin Electric vs. Donaldson |
| Crane NXT vs. Donaldson | Crane NXT vs. ITT Inc | Crane NXT vs. Franklin Electric Co | Crane NXT vs. Enerpac Tool Group |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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