Correlation Between Logan Ridge and Franklin Credit

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

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

Diversification Opportunities for Logan Ridge and Franklin Credit

0.27

Correlation Coefficient

Logan Ridge  Franklin Credit

Modest diversification

The 3 months correlation between Logan and Franklin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and Franklin Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Credit Mana and Logan Ridge 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 Logan Ridge Finance are associated (or correlated) with Franklin Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Credit Mana has no effect on the direction of Logan Ridge i.e., Logan Ridge and Franklin Credit go up and down completely randomly.

Pair Corralation between Logan Ridge and Franklin Credit

Given the investment horizon of 90 days Logan Ridge is expected to generate 8.4 times less return on investment than Franklin Credit. But when comparing it to its historical volatility, Logan Ridge Finance is 10.59 times less risky than Franklin Credit. It trades about 0.06 of its potential returns per unit of risk. Franklin Credit Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Franklin Credit Management on September 24, 2024 and sell it today you would earn a total of  1.00  from holding Franklin Credit Management or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Logan Ridge Finance  vs.  Franklin Credit Management

Logan Ridge Finance

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Logan Ridge is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Franklin Credit Mana

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Credit Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Franklin Credit displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Logan Ridge and Franklin Credit

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

The idea behind Logan Ridge Finance and Franklin Credit Management 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.