Correlation Between Franklin Electric and Hillenbrand

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

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

Diversification Opportunities for Franklin Electric and Hillenbrand

0.16

Correlation Coefficient

Franklin Electric  Hillenbrand

Average diversification

The 3 months correlation between Franklin and Hillenbrand is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Hillenbrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillenbrand and Franklin Electric 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 Electric Co are associated (or correlated) with Hillenbrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillenbrand has no effect on the direction of Franklin Electric i.e., Franklin Electric and Hillenbrand go up and down completely randomly.

Pair Corralation between Franklin Electric and Hillenbrand

Given the investment horizon of 90 days Franklin Electric Co is expected to generate 0.54 times more return on investment than Hillenbrand. However, Franklin Electric Co is 1.85 times less risky than Hillenbrand. It trades about -0.02 of its potential returns per unit of risk. Hillenbrand is currently generating about -0.11 per unit of risk. If you would invest  9,702  in Franklin Electric Co on December 30, 2024 and sell it today you would lose (242.00) from holding Franklin Electric Co or give up 2.49% of portfolio value over 90 days.

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

Franklin Electric Co  vs.  Hillenbrand

Franklin Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Franklin Electric is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Hillenbrand

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Franklin Electric and Hillenbrand

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

The idea behind Franklin Electric Co and Hillenbrand 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.