Correlation Between Franklin Street and Celestica

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

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

Diversification Opportunities for Franklin Street and Celestica

0.8

Correlation Coefficient

Franklin Street  Celestica

Very poor diversification

The 3 months correlation between Franklin and Celestica is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Franklin Street 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 Street Properties are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Franklin Street i.e., Franklin Street and Celestica go up and down completely randomly.

Pair Corralation between Franklin Street and Celestica

Considering the 90-day investment horizon Franklin Street Properties is expected to under-perform the Celestica. In addition to that, Franklin Street is 1.03 times more volatile than Celestica. It trades about 0.0 of its total potential returns per unit of risk. Celestica is currently generating about 0.11 per unit of volatility. If you would invest  8,916  in Celestica on September 23, 2024 and sell it today you would earn a total of  629.00  from holding Celestica or generate 7.05% return on investment over 90 days.

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

Franklin Street Properties  vs.  Celestica

Franklin Street Prop

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Street Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Franklin Street reported solid returns over the last few months and may actually be approaching a breakup point.

Celestica

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Street and Celestica

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

The idea behind Franklin Street Properties and Celestica 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.