Correlation Between Tennant and Franklin Electric
Can any of the company-specific risk be diversified away by investing in both Tennant 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 Tennant and Franklin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tennant Company and Franklin Electric Co, you can compare the effects of market volatilities on Tennant 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 Tennant with a short position of Franklin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tennant and Franklin Electric.
Diversification Opportunities for Tennant and Franklin Electric
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tennant and Franklin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tennant Company and Franklin Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Electric and Tennant 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 Tennant Company 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 Tennant i.e., Tennant and Franklin Electric go up and down completely randomly.
Pair Corralation between Tennant and Franklin Electric
Considering the 90-day investment horizon Tennant Company is expected to generate 0.94 times more return on investment than Franklin Electric. However, Tennant Company is 1.06 times less risky than Franklin Electric. It trades about 0.28 of its potential returns per unit of risk. Franklin Electric Co is currently generating about 0.0 per unit of risk. If you would invest 8,152 in Tennant Company on October 26, 2024 and sell it today you would earn a total of 487.00 from holding Tennant Company or generate 5.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tennant Company vs. Franklin Electric Co
Performance |
| Timeline |
| Tennant Company |
| Franklin Electric |
Tennant and Franklin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tennant and Franklin Electric
The main advantage of trading using opposite Tennant and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tennant 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.| Tennant vs. Franklin Electric Co | Tennant vs. Omega Flex | Tennant vs. Luxfer Holdings PLC | Tennant vs. Kadant Inc |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |