Correlation Between Franchise and Polished
Can any of the company-specific risk be diversified away by investing in both Franchise and Polished 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 Franchise and Polished into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franchise Group and Polished, you can compare the effects of market volatilities on Franchise and Polished 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 Franchise with a short position of Polished. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franchise and Polished.
Diversification Opportunities for Franchise and Polished
Very weak diversification
The 3 months correlation between Franchise and Polished is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Franchise Group and Polished in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polished and Franchise 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 Franchise Group are associated (or correlated) with Polished. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polished has no effect on the direction of Franchise i.e., Franchise and Polished go up and down completely randomly.
Pair Corralation between Franchise and Polished
Considering the 90-day investment horizon Franchise is expected to generate 6.05 times less return on investment than Polished. But when comparing it to its historical volatility, Franchise Group is 9.41 times less risky than Polished. It trades about 0.11 of its potential returns per unit of risk. Polished is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 50.00 in Polished on August 31, 2024 and sell it today you would earn a total of 4.00 from holding Polished or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franchise Group vs. Polished
Performance |
| Timeline |
| Franchise Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Polished |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Franchise and Polished Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franchise and Polished
The main advantage of trading using opposite Franchise and Polished positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franchise position performs unexpectedly, Polished 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 Polished will offset losses from the drop in Polished's long position.| Franchise vs. Mega Uranium | Franchise vs. Laramide Resources | Franchise vs. NXG NextGen Infrastructure | Franchise vs. Pinetree Capital |
| Polished vs. Sally Beauty Holdings | Polished vs. National Vision Holdings | Polished vs. Big 5 Sporting | Polished vs. Pet Acquisition LLC |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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