Correlation Between Franklin Electric and Omega Flex
Can any of the company-specific risk be diversified away by investing in both Franklin Electric and Omega Flex 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 Omega Flex 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 Omega Flex, you can compare the effects of market volatilities on Franklin Electric and Omega Flex 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 Omega Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Omega Flex.
Diversification Opportunities for Franklin Electric and Omega Flex
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Omega is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Omega Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Flex 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 Omega Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Flex has no effect on the direction of Franklin Electric i.e., Franklin Electric and Omega Flex go up and down completely randomly.
Pair Corralation between Franklin Electric and Omega Flex
Given the investment horizon of 90 days Franklin Electric Co is expected to generate 0.74 times more return on investment than Omega Flex. However, Franklin Electric Co is 1.36 times less risky than Omega Flex. It trades about 0.03 of its potential returns per unit of risk. Omega Flex is currently generating about -0.15 per unit of risk. If you would invest 9,728 in Franklin Electric Co on November 1, 2024 and sell it today you would earn a total of 207.00 from holding Franklin Electric Co or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Electric Co vs. Omega Flex
Performance |
| Timeline |
| Franklin Electric |
| Omega Flex |
Franklin Electric and Omega Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Electric and Omega Flex
The main advantage of trading using opposite Franklin Electric and Omega Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric position performs unexpectedly, Omega Flex 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 Omega Flex will offset losses from the drop in Omega Flex's long position.| Franklin Electric vs. Graco Inc | Franklin Electric vs. Ametek Inc | Franklin Electric vs. Flowserve | Franklin Electric vs. Donaldson |
| Omega Flex vs. Helios Technologies | Omega Flex vs. Enpro Industries | Omega Flex vs. Luxfer Holdings PLC | Omega Flex 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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