Correlation Between Franklin Wireless and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Franklin Wireless and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Franklin Wireless and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Wireless and Summit Materials.
Diversification Opportunities for Franklin Wireless and Summit Materials
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Summit is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and Summit Materials go up and down completely randomly.
Pair Corralation between Franklin Wireless and Summit Materials
Given the investment horizon of 90 days Franklin Wireless is expected to generate 9.8 times less return on investment than Summit Materials. In addition to that, Franklin Wireless is 1.2 times more volatile than Summit Materials. It trades about 0.0 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.06 per unit of volatility. If you would invest 3,259 in Summit Materials on November 5, 2024 and sell it today you would earn a total of 1,972 from holding Summit Materials or generate 60.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Wireless Corp vs. Summit Materials
Performance |
| Timeline |
| Franklin Wireless Corp |
| Summit Materials |
Franklin Wireless and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Wireless and Summit Materials
The main advantage of trading using opposite Franklin Wireless and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Wireless position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' 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 |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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