Correlation Between Franklin Electric and Helios Technologies
Can any of the company-specific risk be diversified away by investing in both Franklin Electric and Helios Technologies 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 Helios Technologies 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 Helios Technologies, you can compare the effects of market volatilities on Franklin Electric and Helios Technologies 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 Helios Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Helios Technologies.
Diversification Opportunities for Franklin Electric and Helios Technologies
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Helios is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Helios Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Technologies 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 Helios Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Technologies has no effect on the direction of Franklin Electric i.e., Franklin Electric and Helios Technologies go up and down completely randomly.
Pair Corralation between Franklin Electric and Helios Technologies
Given the investment horizon of 90 days Franklin Electric is expected to generate 1.64 times less return on investment than Helios Technologies. But when comparing it to its historical volatility, Franklin Electric Co is 1.39 times less risky than Helios Technologies. It trades about 0.12 of its potential returns per unit of risk. Helios Technologies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,789 in Helios Technologies on August 27, 2024 and sell it today you would earn a total of 519.00 from holding Helios Technologies or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Electric Co vs. Helios Technologies
Performance |
| Timeline |
| Franklin Electric |
| Helios Technologies |
Franklin Electric and Helios Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Electric and Helios Technologies
The main advantage of trading using opposite Franklin Electric and Helios Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric position performs unexpectedly, Helios Technologies 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 Helios Technologies will offset losses from the drop in Helios Technologies' 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 |
| Helios Technologies vs. Enpro Industries | Helios Technologies vs. Omega Flex | Helios Technologies vs. Luxfer Holdings PLC | Helios Technologies vs. Hurco Companies |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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