Correlation Between Franklin Covey and Booz Allen

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

By analyzing existing cross correlation between Franklin Covey and Booz Allen Hamilton, you can compare the effects of market volatilities on Franklin Covey and Booz Allen 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 Booz Allen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Covey and Booz Allen.

Diversification Opportunities for Franklin Covey and Booz Allen

0.66

Correlation Coefficient

Franklin Covey  Booz Allen

Poor diversification

The 3 months correlation between Franklin and Booz is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey and Booz Allen Hamilton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booz Allen Hamilton 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 Booz Allen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booz Allen Hamilton has no effect on the direction of Franklin Covey i.e., Franklin Covey and Booz Allen go up and down completely randomly.

Pair Corralation between Franklin Covey and Booz Allen

Allowing for the 90-day total investment horizon Franklin Covey is expected to generate 0.81 times more return on investment than Booz Allen. However, Franklin Covey is 1.24 times less risky than Booz Allen. It trades about -0.03 of its potential returns per unit of risk. Booz Allen Hamilton is currently generating about -0.31 per unit of risk. If you would invest  3,685  in Franklin Covey on September 24, 2024 and sell it today you would lose (44.00) from holding Franklin Covey or give up 1.19% of portfolio value over 90 days.

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

Franklin Covey  vs.  Booz Allen Hamilton

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.

Booz Allen Hamilton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Booz Allen Hamilton has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Franklin Covey and Booz Allen

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

The idea behind Franklin Covey and Booz Allen Hamilton 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.