Correlation Between Franklin Wireless and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Franklin Wireless and Naked Wines 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 Wireless and Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Wireless Corp and Naked Wines plc, you can compare the effects of market volatilities on Franklin Wireless and Naked Wines 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 Wireless with a short position of Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Wireless and Naked Wines.
Diversification Opportunities for Franklin Wireless and Naked Wines
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Naked is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc and Franklin Wireless 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 Wireless Corp are associated (or correlated) with Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and Naked Wines go up and down completely randomly.
Pair Corralation between Franklin Wireless and Naked Wines
Given the investment horizon of 90 days Franklin Wireless is expected to generate 4.17 times less return on investment than Naked Wines. In addition to that, Franklin Wireless is 1.19 times more volatile than Naked Wines plc. It trades about 0.04 of its total potential returns per unit of risk. Naked Wines plc is currently generating about 0.22 per unit of volatility. If you would invest 252.00 in Naked Wines plc on August 27, 2024 and sell it today you would earn a total of 19.00 from holding Naked Wines plc or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Wireless Corp vs. Naked Wines plc
Performance |
| Timeline |
| Franklin Wireless Corp |
| Naked Wines plc |
Franklin Wireless and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Wireless and Naked Wines
The main advantage of trading using opposite Franklin Wireless and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Wireless position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' long position.| Franklin Wireless vs. Wialan Technologies | Franklin Wireless vs. TPT Global Tech | Franklin Wireless vs. Moving iMage Technologies | Franklin Wireless vs. Comtech Telecommunications Corp |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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