Correlation Between Franklin Wireless and Bausch Lomb

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

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

Diversification Opportunities for Franklin Wireless and Bausch Lomb

-0.71

Correlation Coefficient

Franklin Wireless  Bausch Lomb

Pay attention - limited upside

The 3 months correlation between Franklin and Bausch is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and Bausch Lomb Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Lomb Corp and Franklin Wireless 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 Wireless Corp are associated (or correlated) with Bausch Lomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Lomb Corp has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and Bausch Lomb go up and down completely randomly.

Pair Corralation between Franklin Wireless and Bausch Lomb

Given the investment horizon of 90 days Franklin Wireless Corp is expected to generate 1.76 times more return on investment than Bausch Lomb. However, Franklin Wireless is 1.76 times more volatile than Bausch Lomb Corp. It trades about 0.08 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about -0.18 per unit of risk. If you would invest  487.00  in Franklin Wireless Corp on December 29, 2024 and sell it today you would earn a total of  73.00  from holding Franklin Wireless Corp or generate 14.99% return on investment over 90 days.

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

Franklin Wireless Corp  vs.  Bausch Lomb Corp

Franklin Wireless Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Franklin Wireless disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bausch Lomb Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bausch Lomb Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Franklin Wireless and Bausch Lomb

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

The idea behind Franklin Wireless Corp and Bausch Lomb Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.