Correlation Between Rockwell Automation and Franklin Electric
Can any of the company-specific risk be diversified away by investing in both Rockwell Automation 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 Rockwell Automation and Franklin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockwell Automation and Franklin Electric Co, you can compare the effects of market volatilities on Rockwell Automation 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 Rockwell Automation with a short position of Franklin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwell Automation and Franklin Electric.
Diversification Opportunities for Rockwell Automation and Franklin Electric
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rockwell and Franklin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Automation and Franklin Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Electric and Rockwell Automation 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 Rockwell Automation 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 Rockwell Automation i.e., Rockwell Automation and Franklin Electric go up and down completely randomly.
Pair Corralation between Rockwell Automation and Franklin Electric
Considering the 90-day investment horizon Rockwell Automation is expected to generate 1.0 times less return on investment than Franklin Electric. In addition to that, Rockwell Automation is 1.14 times more volatile than Franklin Electric Co. It trades about 0.04 of its total potential returns per unit of risk. Franklin Electric Co is currently generating about 0.05 per unit of volatility. If you would invest 9,758 in Franklin Electric Co on August 24, 2024 and sell it today you would earn a total of 906.00 from holding Franklin Electric Co or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rockwell Automation vs. Franklin Electric Co
Performance |
| Timeline |
| Rockwell Automation |
| Franklin Electric |
Rockwell Automation and Franklin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockwell Automation and Franklin Electric
The main advantage of trading using opposite Rockwell Automation and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Automation 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.| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton PLC |
| Franklin Electric vs. Illinois Tool Works | Franklin Electric vs. Small Cap Core | Franklin Electric vs. Freedom Holding Corp | Franklin Electric vs. Gfl Environmental Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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