Correlation Between Chart Industries and Franklin Electric
Can any of the company-specific risk be diversified away by investing in both Chart Industries and Franklin Electric 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 Chart Industries and Franklin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chart Industries and Franklin Electric Co, you can compare the effects of market volatilities on Chart Industries and Franklin Electric 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 Chart Industries with a short position of Franklin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chart Industries and Franklin Electric.
Diversification Opportunities for Chart Industries and Franklin Electric
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chart and Franklin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and Franklin Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Electric and Chart Industries 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 Chart Industries are associated (or correlated) with Franklin Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Electric has no effect on the direction of Chart Industries i.e., Chart Industries and Franklin Electric go up and down completely randomly.
Pair Corralation between Chart Industries and Franklin Electric
Given the investment horizon of 90 days Chart Industries is expected to generate 2.01 times more return on investment than Franklin Electric. However, Chart Industries is 2.01 times more volatile than Franklin Electric Co. It trades about 0.07 of its potential returns per unit of risk. Franklin Electric Co is currently generating about 0.04 per unit of risk. If you would invest 13,016 in Chart Industries on September 12, 2024 and sell it today you would earn a total of 6,192 from holding Chart Industries or generate 47.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chart Industries vs. Franklin Electric Co
Performance |
| Timeline |
| Chart Industries |
| Franklin Electric |
Chart Industries and Franklin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chart Industries and Franklin Electric
The main advantage of trading using opposite Chart Industries and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chart Industries position performs unexpectedly, Franklin Electric 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 Franklin Electric will offset losses from the drop in Franklin Electric's long position.| Chart Industries vs. Franklin Electric Co | Chart Industries vs. Graco Inc | Chart Industries vs. IDEX Corporation | Chart Industries vs. Ingersoll Rand |
| Franklin Electric vs. Graco Inc | Franklin Electric vs. Ametek Inc | Franklin Electric vs. Flowserve | Franklin Electric vs. Donaldson |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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