Correlation Between Franklin Covey and Exponent

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

By analyzing existing cross correlation between Franklin Covey and Exponent, you can compare the effects of market volatilities on Franklin Covey and Exponent 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 Exponent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Covey and Exponent.

Diversification Opportunities for Franklin Covey and Exponent

0.74

Correlation Coefficient

Franklin Covey  Exponent

Poor diversification

The 3 months correlation between Franklin and Exponent is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent 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 Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Franklin Covey i.e., Franklin Covey and Exponent go up and down completely randomly.

Pair Corralation between Franklin Covey and Exponent

Allowing for the 90-day total investment horizon Franklin Covey is expected to under-perform the Exponent. In addition to that, Franklin Covey is 1.49 times more volatile than Exponent. It trades about -0.01 of its total potential returns per unit of risk. Exponent is currently generating about 0.03 per unit of volatility. If you would invest  7,692  in Exponent on January 20, 2024 and sell it today you would earn a total of  120.00  from holding Exponent or generate 1.56% return on investment over 90 days.

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

Franklin Covey  vs.  Exponent

Franklin Covey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Covey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Exponent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Franklin Covey and Exponent

The main advantage of trading using opposite Franklin Covey and Exponent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Covey position performs unexpectedly, Exponent 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 Exponent will offset losses from the drop in Exponent's long position.

The idea behind Franklin Covey and Exponent 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.