Correlation Between Franklin Electric and Regal Beloit
Can any of the company-specific risk be diversified away by investing in both Franklin Electric and Regal Beloit 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 Regal Beloit 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 Regal Beloit, you can compare the effects of market volatilities on Franklin Electric and Regal Beloit 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 Regal Beloit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Regal Beloit.
Diversification Opportunities for Franklin Electric and Regal Beloit
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Regal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Regal Beloit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Beloit 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 Regal Beloit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Beloit has no effect on the direction of Franklin Electric i.e., Franklin Electric and Regal Beloit go up and down completely randomly.
Pair Corralation between Franklin Electric and Regal Beloit
Given the investment horizon of 90 days Franklin Electric Co is expected to generate 1.06 times more return on investment than Regal Beloit. However, Franklin Electric is 1.06 times more volatile than Regal Beloit. It trades about 0.1 of its potential returns per unit of risk. Regal Beloit is currently generating about 0.02 per unit of risk. If you would invest 10,232 in Franklin Electric Co on August 29, 2024 and sell it today you would earn a total of 572.00 from holding Franklin Electric Co or generate 5.59% 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. Regal Beloit
Performance |
| Timeline |
| Franklin Electric |
| Regal Beloit |
Franklin Electric and Regal Beloit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Electric and Regal Beloit
The main advantage of trading using opposite Franklin Electric and Regal Beloit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric position performs unexpectedly, Regal Beloit 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 Regal Beloit will offset losses from the drop in Regal Beloit'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 |
| Regal Beloit vs. IDEX Corporation | Regal Beloit vs. Watts Water Technologies | Regal Beloit vs. Donaldson | Regal Beloit vs. Gorman Rupp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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