Correlation Between Franklin Wireless and Sphere Entertainment

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

Diversification Opportunities for Franklin Wireless and Sphere Entertainment

0.67

Correlation Coefficient

Franklin Wireless  Sphere Entertainment

Poor diversification

The 3 months correlation between Franklin and Sphere is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Franklin Wireless and Sphere Entertainment

Given the investment horizon of 90 days Franklin Wireless Corp is expected to generate 1.11 times more return on investment than Sphere Entertainment. However, Franklin Wireless is 1.11 times more volatile than Sphere Entertainment Co. It trades about 0.25 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.03 per unit of risk. If you would invest  430.00  in Franklin Wireless Corp on December 3, 2024 and sell it today you would earn a total of  253.00  from holding Franklin Wireless Corp or generate 58.84% return on investment over 90 days.

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

Franklin Wireless Corp  vs.  Sphere Entertainment Co

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.

Sphere Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Sphere Entertainment is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Franklin Wireless and Sphere Entertainment

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

The idea behind Franklin Wireless Corp and Sphere Entertainment Co 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.