Correlation Between Franklin Electric and Intevac

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

By analyzing existing cross correlation between Franklin Electric Co and Intevac, you can compare the effects of market volatilities on Franklin Electric and Intevac 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 Electric with a short position of Intevac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Intevac.

Diversification Opportunities for Franklin Electric and Intevac

-0.42

Correlation Coefficient

Franklin Electric  Intevac

Very good diversification

The 3 months correlation between Franklin and Intevac is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Intevac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intevac and Franklin Electric 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 Electric Co are associated (or correlated) with Intevac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intevac has no effect on the direction of Franklin Electric i.e., Franklin Electric and Intevac go up and down completely randomly.

Pair Corralation between Franklin Electric and Intevac

Given the investment horizon of 90 days Franklin Electric Co is expected to generate 0.49 times more return on investment than Intevac. However, Franklin Electric Co is 2.02 times less risky than Intevac. It trades about 0.04 of its potential returns per unit of risk. Intevac is currently generating about -0.1 per unit of risk. If you would invest  10,458  in Franklin Electric Co on August 31, 2024 and sell it today you would earn a total of  259.00  from holding Franklin Electric Co or generate 2.48% return on investment over 90 days.

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

Franklin Electric Co  vs.  Intevac

Franklin Electric

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Electric Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Franklin Electric may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Intevac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intevac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Franklin Electric and Intevac

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

The idea behind Franklin Electric Co and Intevac 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.