Correlation Between Franklin Wireless and Warner Music
Can any of the company-specific risk be diversified away by investing in both Franklin Wireless and Warner Music 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 Warner Music 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 Warner Music Group, you can compare the effects of market volatilities on Franklin Wireless and Warner Music 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 Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Wireless and Warner Music.
Diversification Opportunities for Franklin Wireless and Warner Music
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Warner is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group 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 Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and Warner Music go up and down completely randomly.
Pair Corralation between Franklin Wireless and Warner Music
Given the investment horizon of 90 days Franklin Wireless Corp is expected to generate 0.91 times more return on investment than Warner Music. However, Franklin Wireless Corp is 1.1 times less risky than Warner Music. It trades about 0.06 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.05 per unit of risk. If you would invest 422.00 in Franklin Wireless Corp on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Franklin Wireless Corp or generate 1.9% 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. Warner Music Group
Performance |
| Timeline |
| Franklin Wireless Corp |
| Warner Music Group |
Franklin Wireless and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Wireless and Warner Music
The main advantage of trading using opposite Franklin Wireless and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Wireless position performs unexpectedly, Warner Music 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 Warner Music will offset losses from the drop in Warner Music's 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 |
| Warner Music vs. ADTRAN Inc | Warner Music vs. Belden Inc | Warner Music vs. ADC Therapeutics SA | Warner Music vs. Comtech Telecommunications Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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