Correlation Between Thrivent High and Franklin Electric
Can any of the company-specific risk be diversified away by investing in both Thrivent High 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 Thrivent High and Franklin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thrivent High Yield and Franklin Electric Co, you can compare the effects of market volatilities on Thrivent High 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 Thrivent High with a short position of Franklin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and Franklin Electric.
Diversification Opportunities for Thrivent High and Franklin Electric
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thrivent and Franklin is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Franklin Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Electric and Thrivent High 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 Thrivent High Yield 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 Thrivent High i.e., Thrivent High and Franklin Electric go up and down completely randomly.
Pair Corralation between Thrivent High and Franklin Electric
Assuming the 90 days horizon Thrivent High is expected to generate 2.16 times less return on investment than Franklin Electric. But when comparing it to its historical volatility, Thrivent High Yield is 6.49 times less risky than Franklin Electric. It trades about 0.16 of its potential returns per unit of risk. Franklin Electric Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,027 in Franklin Electric Co on August 29, 2024 and sell it today you would earn a total of 1,777 from holding Franklin Electric Co or generate 19.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thrivent High Yield vs. Franklin Electric Co
Performance |
| Timeline |
| Thrivent High Yield |
| Franklin Electric |
Thrivent High and Franklin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thrivent High and Franklin Electric
The main advantage of trading using opposite Thrivent High and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent High 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.| Thrivent High vs. Thrivent Limited Maturity | Thrivent High vs. Thrivent Income Fund | Thrivent High vs. Thrivent Large Cap | Thrivent High vs. Thrivent Large Cap |
| Franklin Electric vs. Parker Hannifin | Franklin Electric vs. Capital Income Builder | Franklin Electric vs. Direxion Daily FTSE | Franklin Electric vs. Dodge Global Stock |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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