Correlation Between Postal Realty and Franklin Wireless

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

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

Diversification Opportunities for Postal Realty and Franklin Wireless

0.46

Correlation Coefficient

Postal Realty  Franklin Wireless

Very weak diversification

The 3 months correlation between Postal and Franklin is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Postal Realty Trust and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp and Postal Realty 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 Postal Realty Trust are associated (or correlated) with Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of Postal Realty i.e., Postal Realty and Franklin Wireless go up and down completely randomly.

Pair Corralation between Postal Realty and Franklin Wireless

Given the investment horizon of 90 days Postal Realty is expected to generate 2.1 times less return on investment than Franklin Wireless. But when comparing it to its historical volatility, Postal Realty Trust is 1.62 times less risky than Franklin Wireless. It trades about 0.08 of its potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  481.00  in Franklin Wireless Corp on December 26, 2024 and sell it today you would earn a total of  93.00  from holding Franklin Wireless Corp or generate 19.33% return on investment over 90 days.

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

Postal Realty Trust  vs.  Franklin Wireless Corp

Postal Realty Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Realty Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Postal Realty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Franklin Wireless Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Franklin Wireless disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Postal Realty and Franklin Wireless

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

The idea behind Postal Realty Trust and Franklin Wireless 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.