Correlation Between Franklin Wireless and INGERSOLL

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

Diversification Opportunities for Franklin Wireless and INGERSOLL

0.43

Correlation Coefficient

Franklin Wireless  INGERSOLL

Very weak diversification

The 3 months correlation between Franklin and INGERSOLL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and INGERSOLL RAND GLOBAL HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND GLOBAL 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 INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND GLOBAL has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and INGERSOLL go up and down completely randomly.

Pair Corralation between Franklin Wireless and INGERSOLL

Given the investment horizon of 90 days Franklin Wireless Corp is expected to generate 6.66 times more return on investment than INGERSOLL. However, Franklin Wireless is 6.66 times more volatile than INGERSOLL RAND GLOBAL HLDG. It trades about 0.07 of its potential returns per unit of risk. INGERSOLL RAND GLOBAL HLDG is currently generating about 0.04 per unit of risk. If you would invest  351.00  in Franklin Wireless Corp on September 19, 2024 and sell it today you would earn a total of  56.00  from holding Franklin Wireless Corp or generate 15.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.27%
Values	Daily Returns

Franklin Wireless Corp  vs.  INGERSOLL RAND GLOBAL HLDG

Franklin Wireless Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Franklin Wireless is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

INGERSOLL RAND GLOBAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND GLOBAL HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INGERSOLL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Wireless and INGERSOLL

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

The idea behind Franklin Wireless Corp and INGERSOLL RAND GLOBAL HLDG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.