Correlation Between RATIONAL Aktiengesellscha and Franklin Electric

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Can any of the company-specific risk be diversified away by investing in both RATIONAL Aktiengesellscha and Franklin Electric 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 RATIONAL Aktiengesellscha and Franklin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RATIONAL Aktiengesellschaft and Franklin Electric Co, you can compare the effects of market volatilities on RATIONAL Aktiengesellscha and Franklin Electric 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 RATIONAL Aktiengesellscha with a short position of Franklin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of RATIONAL Aktiengesellscha and Franklin Electric.

Diversification Opportunities for RATIONAL Aktiengesellscha and Franklin Electric

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between RATIONAL and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RATIONAL Aktiengesellschaft and Franklin Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Electric and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellschaft are associated (or correlated) with Franklin Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Electric has no effect on the direction of RATIONAL Aktiengesellscha i.e., RATIONAL Aktiengesellscha and Franklin Electric go up and down completely randomly.

Pair Corralation between RATIONAL Aktiengesellscha and Franklin Electric

Assuming the 90 days horizon RATIONAL Aktiengesellschaft is expected to generate 1.11 times more return on investment than Franklin Electric. However, RATIONAL Aktiengesellscha is 1.11 times more volatile than Franklin Electric Co. It trades about 0.05 of its potential returns per unit of risk. Franklin Electric Co is currently generating about 0.04 per unit of risk. If you would invest  2,933  in RATIONAL Aktiengesellschaft on September 25, 2024 and sell it today you would earn a total of  1,143  from holding RATIONAL Aktiengesellschaft or generate 38.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

RATIONAL Aktiengesellschaft  vs.  Franklin Electric Co

 Performance 
       Timeline  
RATIONAL Aktiengesellscha 

Risk-Adjusted Performance

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Over the last 90 days RATIONAL Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, RATIONAL Aktiengesellscha is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Franklin Electric 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Franklin Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Franklin Electric is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

RATIONAL Aktiengesellscha and Franklin Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with RATIONAL Aktiengesellscha and Franklin Electric

The main advantage of trading using opposite RATIONAL Aktiengesellscha and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RATIONAL Aktiengesellscha position performs unexpectedly, Franklin Electric 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 Electric will offset losses from the drop in Franklin Electric's long position.
The idea behind RATIONAL Aktiengesellschaft and Franklin Electric 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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