Correlation Between Franklin Covey and Mamas Creations

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

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

Diversification Opportunities for Franklin Covey and Mamas Creations

0.77

Correlation Coefficient

Franklin Covey  Mamas Creations

Poor diversification

The 3 months correlation between Franklin and Mamas is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey and Mamas Creations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mamas Creations 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 Mamas Creations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mamas Creations has no effect on the direction of Franklin Covey i.e., Franklin Covey and Mamas Creations go up and down completely randomly.

Pair Corralation between Franklin Covey and Mamas Creations

Allowing for the 90-day total investment horizon Franklin Covey is expected to under-perform the Mamas Creations. But the stock apears to be less risky and, when comparing its historical volatility, Franklin Covey is 1.52 times less risky than Mamas Creations. The stock trades about -0.18 of its potential returns per unit of risk. The Mamas Creations is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  792.00  in Mamas Creations on December 28, 2024 and sell it today you would lose (158.00) from holding Mamas Creations or give up 19.95% 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.  Mamas Creations

Franklin Covey

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Mamas Creations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mamas Creations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Franklin Covey and Mamas Creations

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

The idea behind Franklin Covey and Mamas Creations 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.