Correlation Between SL Green and Franklin Wireless

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

Diversification Opportunities for SL Green and Franklin Wireless

-0.8
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between SLG and Franklin is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty 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 SL Green 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 SL Green Realty 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 SL Green i.e., SL Green and Franklin Wireless go up and down completely randomly.

Pair Corralation between SL Green and Franklin Wireless

Considering the 90-day investment horizon SL Green Realty is expected to generate 1.36 times more return on investment than Franklin Wireless. However, SL Green is 1.36 times more volatile than Franklin Wireless Corp. It trades about 0.05 of its potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.01 per unit of risk. If you would invest  3,790  in SL Green Realty on October 24, 2024 and sell it today you would earn a total of  2,860  from holding SL Green Realty or generate 75.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

SL Green Realty  vs.  Franklin Wireless Corp

 Performance 
       Timeline  
SL Green Realty 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Franklin Wireless Corp 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 11 (%) 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.

SL Green and Franklin Wireless Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SL Green and Franklin Wireless

The main advantage of trading using opposite SL Green and Franklin Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green 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 SL Green Realty 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.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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