Correlation Between Franklin Covey and Tootsie Roll

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

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

Diversification Opportunities for Franklin Covey and Tootsie Roll

-0.68

Correlation Coefficient

Franklin Covey  Tootsie Roll

Excellent diversification

The 3 months correlation between Franklin and Tootsie is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey and Tootsie Roll Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tootsie Roll Industries 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 Tootsie Roll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tootsie Roll Industries has no effect on the direction of Franklin Covey i.e., Franklin Covey and Tootsie Roll go up and down completely randomly.

Pair Corralation between Franklin Covey and Tootsie Roll

Allowing for the 90-day total investment horizon Franklin Covey is expected to under-perform the Tootsie Roll. In addition to that, Franklin Covey is 1.9 times more volatile than Tootsie Roll Industries. It trades about -0.01 of its total potential returns per unit of risk. Tootsie Roll Industries is currently generating about -0.01 per unit of volatility. If you would invest  3,243  in Tootsie Roll Industries on September 12, 2024 and sell it today you would lose (59.00) from holding Tootsie Roll Industries or give up 1.82% of portfolio value over 90 days.

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

Franklin Covey  vs.  Tootsie Roll Industries

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 rather sound fundamental indicators, Franklin Covey is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Tootsie Roll Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tootsie Roll Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tootsie Roll is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Franklin Covey and Tootsie Roll

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

The idea behind Franklin Covey and Tootsie Roll Industries 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..