Correlation Between Franklin Wireless and National Beverage

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

Diversification Opportunities for Franklin Wireless and National Beverage

-0.74

Correlation Coefficient

Franklin Wireless  National Beverage

Pay attention - limited upside

The 3 months correlation between Franklin and National is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and National Beverage go up and down completely randomly.

Pair Corralation between Franklin Wireless and National Beverage

Given the investment horizon of 90 days Franklin Wireless Corp is expected to generate 2.04 times more return on investment than National Beverage. However, Franklin Wireless is 2.04 times more volatile than National Beverage Corp. It trades about 0.24 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.21 per unit of risk. If you would invest  431.00  in Franklin Wireless Corp on December 4, 2024 and sell it today you would earn a total of  245.00  from holding Franklin Wireless Corp or generate 56.84% 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.  National Beverage Corp

Franklin Wireless Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Franklin Wireless disclosed solid returns over the last few months and may actually be approaching a breakup point.

National Beverage Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Franklin Wireless and National Beverage

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

The idea behind Franklin Wireless Corp and National Beverage 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.