Correlation Between Franklin Electric and Omega Flex

Can any of the company-specific risk be diversified away by investing in both Franklin Electric and Omega Flex 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 Omega Flex 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 Omega Flex, you can compare the effects of market volatilities on Franklin Electric and Omega Flex 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 Omega Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Omega Flex.

Diversification Opportunities for Franklin Electric and Omega Flex

0.5

Correlation Coefficient

Franklin Electric  Omega Flex

Very weak diversification

The 3 months correlation between Franklin and Omega is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Omega Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Flex 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 Omega Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Flex has no effect on the direction of Franklin Electric i.e., Franklin Electric and Omega Flex go up and down completely randomly.

Pair Corralation between Franklin Electric and Omega Flex

Given the investment horizon of 90 days Franklin Electric is expected to generate 1.26 times less return on investment than Omega Flex. But when comparing it to its historical volatility, Franklin Electric Co is 1.08 times less risky than Omega Flex. It trades about 0.08 of its potential returns per unit of risk. Omega Flex is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,434  in Omega Flex on September 2, 2024 and sell it today you would earn a total of  508.00  from holding Omega Flex or generate 11.46% return on investment over 90 days.

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

Franklin Electric Co  vs.  Omega Flex

Franklin Electric

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Electric Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal essential indicators, Franklin Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Omega Flex

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Flex are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Omega Flex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Franklin Electric and Omega Flex

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

The idea behind Franklin Electric Co and Omega Flex 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.