Correlation Between Franklin Credit and Singapore Airlines

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

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

Diversification Opportunities for Franklin Credit and Singapore Airlines

-0.36

Correlation Coefficient

Franklin Credit  Singapore Airlines

Very good diversification

The 3 months correlation between Franklin and Singapore is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Credit Management and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Franklin Credit 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 Credit Management are associated (or correlated) with Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of Franklin Credit i.e., Franklin Credit and Singapore Airlines go up and down completely randomly.

Pair Corralation between Franklin Credit and Singapore Airlines

Given the investment horizon of 90 days Franklin Credit Management is expected to generate 14.85 times more return on investment than Singapore Airlines. However, Franklin Credit is 14.85 times more volatile than Singapore Airlines. It trades about 0.06 of its potential returns per unit of risk. Singapore Airlines is currently generating about 0.15 per unit of risk. If you would invest  11.00  in Franklin Credit Management on December 21, 2024 and sell it today you would lose (1.00) from holding Franklin Credit Management or give up 9.09% of portfolio value over 90 days.

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

Franklin Credit Management  vs.  Singapore Airlines

Franklin Credit Mana

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Credit Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Franklin Credit displayed solid returns over the last few months and may actually be approaching a breakup point.

Singapore Airlines

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Airlines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Singapore Airlines may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Franklin Credit and Singapore Airlines

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

The idea behind Franklin Credit Management and Singapore Airlines 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.