Correlation Between Ziff Davis and Franklin Wireless

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

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

Diversification Opportunities for Ziff Davis and Franklin Wireless

-0.09

Correlation Coefficient

Ziff Davis  Franklin Wireless

Good diversification

The 3 months correlation between Ziff and Franklin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ziff Davis 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 Ziff Davis 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 Ziff Davis 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 Ziff Davis i.e., Ziff Davis and Franklin Wireless go up and down completely randomly.

Pair Corralation between Ziff Davis and Franklin Wireless

Allowing for the 90-day total investment horizon Ziff Davis is expected to under-perform the Franklin Wireless. But the stock apears to be less risky and, when comparing its historical volatility, Ziff Davis is 1.15 times less risky than Franklin Wireless. The stock trades about -0.04 of its potential returns per unit of risk. The Franklin Wireless Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  501.00  in Franklin Wireless Corp on September 29, 2024 and sell it today you would lose (20.00) from holding Franklin Wireless Corp or give up 3.99% of portfolio value over 90 days.

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

Ziff Davis  vs.  Franklin Wireless Corp

Ziff Davis

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ziff Davis are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ziff Davis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Franklin Wireless Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Franklin Wireless is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ziff Davis and Franklin Wireless

The main advantage of trading using opposite Ziff Davis and Franklin Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ziff Davis 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 Ziff Davis 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 Stocks Directory module to find actively traded stocks across global markets.