Correlation Between Enpro Industries and Franklin Electric
Can any of the company-specific risk be diversified away by investing in both Enpro 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 Enpro 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 Enpro Industries and Franklin Electric Co, you can compare the effects of market volatilities on Enpro 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 Enpro Industries with a short position of Franklin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enpro Industries and Franklin Electric.
Diversification Opportunities for Enpro Industries and Franklin Electric
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Enpro and Franklin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Enpro 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 Enpro 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 Enpro 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 Enpro Industries i.e., Enpro Industries and Franklin Electric go up and down completely randomly.
Pair Corralation between Enpro Industries and Franklin Electric
Considering the 90-day investment horizon Enpro Industries is expected to generate 1.29 times more return on investment than Franklin Electric. However, Enpro Industries is 1.29 times more volatile than Franklin Electric Co. It trades about 0.43 of its potential returns per unit of risk. Franklin Electric Co is currently generating about 0.07 per unit of risk. If you would invest 17,340 in Enpro Industries on November 18, 2024 and sell it today you would earn a total of 1,956 from holding Enpro Industries or generate 11.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enpro Industries vs. Franklin Electric Co
Performance |
| Timeline |
| Enpro Industries |
| Franklin Electric |
Enpro Industries and Franklin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enpro Industries and Franklin Electric
The main advantage of trading using opposite Enpro Industries and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enpro 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.| Enpro Industries vs. Helios Technologies | Enpro Industries vs. Omega Flex | Enpro Industries vs. Luxfer Holdings PLC | Enpro Industries vs. Hurco Companies |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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