Correlation Between Franklin Electric and Curtiss Wright
Can any of the company-specific risk be diversified away by investing in both Franklin Electric and Curtiss Wright 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 Curtiss Wright 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 Curtiss Wright, you can compare the effects of market volatilities on Franklin Electric and Curtiss Wright 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 Curtiss Wright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Curtiss Wright.
Diversification Opportunities for Franklin Electric and Curtiss Wright
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Curtiss is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright 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 Curtiss Wright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curtiss Wright has no effect on the direction of Franklin Electric i.e., Franklin Electric and Curtiss Wright go up and down completely randomly.
Pair Corralation between Franklin Electric and Curtiss Wright
Given the investment horizon of 90 days Franklin Electric is expected to generate 1.71 times less return on investment than Curtiss Wright. In addition to that, Franklin Electric is 1.15 times more volatile than Curtiss Wright. It trades about 0.05 of its total potential returns per unit of risk. Curtiss Wright is currently generating about 0.1 per unit of volatility. If you would invest 14,184 in Curtiss Wright on February 6, 2024 and sell it today you would earn a total of 13,080 from holding Curtiss Wright or generate 92.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Electric Co vs. Curtiss Wright
Performance |
Timeline |
Franklin Electric |
Curtiss Wright |
Franklin Electric and Curtiss Wright Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Electric and Curtiss Wright
The main advantage of trading using opposite Franklin Electric and Curtiss Wright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric position performs unexpectedly, Curtiss Wright 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 Curtiss Wright will offset losses from the drop in Curtiss Wright's long position.Franklin Electric vs. Graco Inc | Franklin Electric vs. Ametek Inc | Franklin Electric vs. Flowserve | Franklin Electric vs. Donaldson |
Curtiss Wright vs. Novocure | Curtiss Wright vs. HubSpot | Curtiss Wright vs. DigitalOcean Holdings | Curtiss Wright vs. Appian Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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