Correlation Between Regal Beloit and Franklin Electric
Can any of the company-specific risk be diversified away by investing in both Regal Beloit 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 Regal Beloit and Franklin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Beloit and Franklin Electric Co, you can compare the effects of market volatilities on Regal Beloit 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 Regal Beloit with a short position of Franklin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Beloit and Franklin Electric.
Diversification Opportunities for Regal Beloit and Franklin Electric
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regal and Franklin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Regal Beloit and Franklin Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Electric and Regal Beloit 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 Regal Beloit 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 Regal Beloit i.e., Regal Beloit and Franklin Electric go up and down completely randomly.
Pair Corralation between Regal Beloit and Franklin Electric
Considering the 90-day investment horizon Regal Beloit is expected to generate 1.36 times more return on investment than Franklin Electric. However, Regal Beloit is 1.36 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 0.05 per unit of risk. If you would invest 14,538 in Regal Beloit on August 24, 2024 and sell it today you would earn a total of 2,836 from holding Regal Beloit or generate 19.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Beloit vs. Franklin Electric Co
Performance |
| Timeline |
| Regal Beloit |
| Franklin Electric |
Regal Beloit and Franklin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Beloit and Franklin Electric
The main advantage of trading using opposite Regal Beloit and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Beloit 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.| Regal Beloit vs. IDEX Corporation | Regal Beloit vs. Watts Water Technologies | Regal Beloit vs. Donaldson | Regal Beloit vs. Gorman Rupp |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |