Correlation Between Franklin Covey and Acacia Research

Can any of the company-specific risk be diversified away by investing in both Franklin Covey and Acacia Research 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 Franklin Covey and Acacia Research into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Covey and Acacia Research, you can compare the effects of market volatilities on Franklin Covey and Acacia Research 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 Franklin Covey with a short position of Acacia Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Covey and Acacia Research.

Diversification Opportunities for Franklin Covey and Acacia Research

0.37

Correlation Coefficient

Franklin Covey  Acacia Research

Weak diversification

The 3 months correlation between Franklin and Acacia is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey and Acacia Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acacia Research and Franklin Covey 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 Franklin Covey are associated (or correlated) with Acacia Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acacia Research has no effect on the direction of Franklin Covey i.e., Franklin Covey and Acacia Research go up and down completely randomly.

Pair Corralation between Franklin Covey and Acacia Research

Allowing for the 90-day total investment horizon Franklin Covey is expected to under-perform the Acacia Research. In addition to that, Franklin Covey is 1.26 times more volatile than Acacia Research. It trades about -0.05 of its total potential returns per unit of risk. Acacia Research is currently generating about -0.02 per unit of volatility. If you would invest  473.00  in Acacia Research on September 5, 2024 and sell it today you would lose (21.00) from holding Acacia Research or give up 4.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Franklin Covey  vs.  Acacia Research

Franklin Covey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Covey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Acacia Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acacia Research has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Acacia Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Franklin Covey and Acacia Research

The main advantage of trading using opposite Franklin Covey and Acacia Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Covey position performs unexpectedly, Acacia Research 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 Acacia Research will offset losses from the drop in Acacia Research's long position.

The idea behind Franklin Covey and Acacia Research 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.

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.