Correlation Between Ampco Pittsburgh and Franklin Electric

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

Diversification Opportunities for Ampco Pittsburgh and Franklin Electric

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ampco and Franklin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ampco-Pittsburgh and Franklin Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Electric and Ampco Pittsburgh 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 Ampco Pittsburgh 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 Ampco Pittsburgh i.e., Ampco Pittsburgh and Franklin Electric go up and down completely randomly.

Pair Corralation between Ampco Pittsburgh and Franklin Electric

Allowing for the 90-day total investment horizon Ampco Pittsburgh is expected to under-perform the Franklin Electric. In addition to that, Ampco Pittsburgh is 2.12 times more volatile than Franklin Electric Co. It trades about -0.03 of its total potential returns per unit of risk. Franklin Electric Co is currently generating about 0.05 per unit of volatility. If you would invest  7,734  in Franklin Electric Co on December 29, 2023 and sell it today you would earn a total of  2,947  from holding Franklin Electric Co or generate 38.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Ampco-Pittsburgh  vs.  Franklin Electric Co

 Performance 
       Timeline  
Ampco-Pittsburgh 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Ampco Pittsburgh has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Franklin Electric 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Electric Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Franklin Electric may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Ampco Pittsburgh and Franklin Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ampco Pittsburgh and Franklin Electric

The main advantage of trading using opposite Ampco Pittsburgh and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampco Pittsburgh 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.
The idea behind Ampco Pittsburgh and Franklin Electric Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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