Correlation Between Standex International and Franklin Electric
Can any of the company-specific risk be diversified away by investing in both Standex International and Franklin Electric 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 Standex International and Franklin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standex International and Franklin Electric Co, you can compare the effects of market volatilities on Standex International and Franklin Electric 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 Standex International with a short position of Franklin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standex International and Franklin Electric.
Diversification Opportunities for Standex International and Franklin Electric
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Standex and Franklin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Standex International and Franklin Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Electric and Standex International 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 Standex International are associated (or correlated) with Franklin Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Electric has no effect on the direction of Standex International i.e., Standex International and Franklin Electric go up and down completely randomly.
Pair Corralation between Standex International and Franklin Electric
Considering the 90-day investment horizon Standex International is expected to generate 1.35 times more return on investment than Franklin Electric. However, Standex International is 1.35 times more volatile than Franklin Electric Co. It trades about 0.05 of its potential returns per unit of risk. Franklin Electric Co is currently generating about 0.01 per unit of risk. If you would invest 14,117 in Standex International on March 2, 2024 and sell it today you would earn a total of 2,542 from holding Standex International or generate 18.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Standex International vs. Franklin Electric Co
Performance |
Timeline |
Standex International |
Franklin Electric |
Standex International and Franklin Electric Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Standex International and Franklin Electric
The main advantage of trading using opposite Standex International and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standex International position performs unexpectedly, Franklin Electric 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 Electric will offset losses from the drop in Franklin Electric's long position.Standex International vs. Emerson Electric | Standex International vs. Parker Hannifin | Standex International vs. Smith AO | Standex International vs. Franklin Electric Co |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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