Correlation Between Service Properties and Franklin Wireless

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

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

Diversification Opportunities for Service Properties and Franklin Wireless

-0.27

Correlation Coefficient

Service Properties  Franklin Wireless

Very good diversification

The 3 months correlation between Service and Franklin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Service Properties 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 Service Properties 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 Service Properties 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 Service Properties i.e., Service Properties and Franklin Wireless go up and down completely randomly.

Pair Corralation between Service Properties and Franklin Wireless

Considering the 90-day investment horizon Service Properties Trust is expected to under-perform the Franklin Wireless. In addition to that, Service Properties is 1.12 times more volatile than Franklin Wireless Corp. It trades about -0.05 of its total potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.02 per unit of volatility. If you would invest  426.00  in Franklin Wireless Corp on October 9, 2024 and sell it today you would earn a total of  74.00  from holding Franklin Wireless Corp or generate 17.37% return on investment over 90 days.

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

Service Properties Trust  vs.  Franklin Wireless Corp

Service Properties Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Service Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Franklin Wireless Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 9 (%) 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 Service Properties and Franklin Wireless

The main advantage of trading using opposite Service Properties and Franklin Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service Properties 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 Service Properties 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 CEOs Directory module to screen CEOs from public companies around the world.