Correlation Between Franklin Credit and Four Seasons

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Can any of the company-specific risk be diversified away by investing in both Franklin Credit and Four Seasons 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 Credit and Four Seasons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Credit Management and Four Seasons Education, you can compare the effects of market volatilities on Franklin Credit and Four Seasons 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 Credit with a short position of Four Seasons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Credit and Four Seasons.

Diversification Opportunities for Franklin Credit and Four Seasons

FranklinFourDiversified AwayFranklinFourDiversified Away100%
-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Franklin and Four is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Credit Management and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons Education and Franklin Credit 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 Credit Management are associated (or correlated) with Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of Franklin Credit i.e., Franklin Credit and Four Seasons go up and down completely randomly.

Pair Corralation between Franklin Credit and Four Seasons

Given the investment horizon of 90 days Franklin Credit Management is expected to generate 1.58 times more return on investment than Four Seasons. However, Franklin Credit is 1.58 times more volatile than Four Seasons Education. It trades about 0.06 of its potential returns per unit of risk. Four Seasons Education is currently generating about -0.07 per unit of risk. If you would invest  10.00  in Franklin Credit Management on September 27, 2024 and sell it today you would earn a total of  1.00  from holding Franklin Credit Management or generate 10.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

Franklin Credit Management  vs.  Four Seasons Education

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 51015202530
JavaScript chart by amCharts 3.21.15FCRM FEDU
       Timeline  
Franklin Credit Mana 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Credit Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Franklin Credit displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.10.1050.110.1150.120.1250.13
Four Seasons Education 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Four Seasons Education 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15NovDecDec99.51010.51111.51212.513

Franklin Credit and Four Seasons Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.68-9.5-6.32-3.130.03.226.59.7713.05 0.0100.0150.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15FCRM FEDU
       Returns  

Pair Trading with Franklin Credit and Four Seasons

The main advantage of trading using opposite Franklin Credit and Four Seasons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Credit position performs unexpectedly, Four Seasons 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 Four Seasons will offset losses from the drop in Four Seasons' long position.
The idea behind Franklin Credit Management and Four Seasons Education 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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