Correlation Between Timken and Franklin Credit
Can any of the company-specific risk be diversified away by investing in both Timken and Franklin Credit 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 Timken and Franklin Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timken Company and Franklin Credit Management, you can compare the effects of market volatilities on Timken and Franklin Credit 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 Timken with a short position of Franklin Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timken and Franklin Credit.
Diversification Opportunities for Timken and Franklin Credit
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Timken and Franklin is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Timken Company and Franklin Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Credit Mana and Timken 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 Timken Company are associated (or correlated) with Franklin Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Credit Mana has no effect on the direction of Timken i.e., Timken and Franklin Credit go up and down completely randomly.
Pair Corralation between Timken and Franklin Credit
Considering the 90-day investment horizon Timken Company is expected to generate 0.67 times more return on investment than Franklin Credit. However, Timken Company is 1.5 times less risky than Franklin Credit. It trades about -0.07 of its potential returns per unit of risk. Franklin Credit Management is currently generating about -0.11 per unit of risk. If you would invest 8,277 in Timken Company on September 2, 2024 and sell it today you would lose (532.00) from holding Timken Company or give up 6.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timken Company vs. Franklin Credit Management
Performance |
| Timeline |
| Timken Company |
| Franklin Credit Mana |
Timken and Franklin Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timken and Franklin Credit
The main advantage of trading using opposite Timken and Franklin Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timken position performs unexpectedly, Franklin Credit 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 Credit will offset losses from the drop in Franklin Credit's long position.The idea behind Timken Company and Franklin Credit Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Franklin Credit vs. Global Healthcare REIT | Franklin Credit vs. Freedom Bank of | Franklin Credit vs. Hinto Energy | Franklin Credit vs. Ensurge |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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