Correlation Between Franklin Covey and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Franklin Covey and Electronic Arts 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 Franklin Covey and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Covey and Electronic Arts, you can compare the effects of market volatilities on Franklin Covey and Electronic Arts 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 Franklin Covey with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Covey and Electronic Arts.
Diversification Opportunities for Franklin Covey and Electronic Arts
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Electronic is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Franklin Covey 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 Franklin Covey are associated (or correlated) with Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Franklin Covey i.e., Franklin Covey and Electronic Arts go up and down completely randomly.
Pair Corralation between Franklin Covey and Electronic Arts
Allowing for the 90-day total investment horizon Franklin Covey is expected to generate 2.64 times more return on investment than Electronic Arts. However, Franklin Covey is 2.64 times more volatile than Electronic Arts. It trades about 0.02 of its potential returns per unit of risk. Electronic Arts is currently generating about -0.32 per unit of risk. If you would invest 3,956 in Franklin Covey on January 25, 2024 and sell it today you would earn a total of 43.00 from holding Franklin Covey or generate 1.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Covey vs. Electronic Arts
Performance |
Timeline |
Franklin Covey |
Electronic Arts |
Franklin Covey and Electronic Arts Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Covey and Electronic Arts
The main advantage of trading using opposite Franklin Covey and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Covey position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.Franklin Covey vs. CRA International | Franklin Covey vs. Thermon Group Holdings | Franklin Covey vs. Forestar Group | Franklin Covey vs. Alamo Group |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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