Correlation Between Franklin Wireless and Frequency Electronics
Can any of the company-specific risk be diversified away by investing in both Franklin Wireless and Frequency Electronics 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 Frequency Electronics 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 Frequency Electronics, you can compare the effects of market volatilities on Franklin Wireless and Frequency Electronics 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 Frequency Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Wireless and Frequency Electronics.
Diversification Opportunities for Franklin Wireless and Frequency Electronics
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Frequency is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and Frequency Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frequency Electronics 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 Frequency Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frequency Electronics has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and Frequency Electronics go up and down completely randomly.
Pair Corralation between Franklin Wireless and Frequency Electronics
Given the investment horizon of 90 days Franklin Wireless Corp is expected to generate 0.7 times more return on investment than Frequency Electronics. However, Franklin Wireless Corp is 1.44 times less risky than Frequency Electronics. It trades about 0.26 of its potential returns per unit of risk. Frequency Electronics is currently generating about 0.07 per unit of risk. If you would invest 425.00 in Franklin Wireless Corp on December 1, 2024 and sell it today you would earn a total of 267.00 from holding Franklin Wireless Corp or generate 62.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Wireless Corp vs. Frequency Electronics
Performance |
Timeline |
Franklin Wireless Corp |
Frequency Electronics |
Franklin Wireless and Frequency Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Wireless and Frequency Electronics
The main advantage of trading using opposite Franklin Wireless and Frequency Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Wireless position performs unexpectedly, Frequency Electronics 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 Frequency Electronics will offset losses from the drop in Frequency Electronics' long position.Franklin Wireless vs. Wialan Technologies | Franklin Wireless vs. TPT Global Tech | Franklin Wireless vs. Moving iMage Technologies | Franklin Wireless vs. Comtech Telecommunications Corp |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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