Correlation Between Franklin Electric and Enerpac Tool

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Franklin Electric and Enerpac Tool 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 Enerpac Tool 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 Enerpac Tool Group, you can compare the effects of market volatilities on Franklin Electric and Enerpac Tool 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 Enerpac Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Enerpac Tool.

Diversification Opportunities for Franklin Electric and Enerpac Tool

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Franklin and Enerpac is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Enerpac Tool Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerpac Tool Group 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 Enerpac Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerpac Tool Group has no effect on the direction of Franklin Electric i.e., Franklin Electric and Enerpac Tool go up and down completely randomly.

Pair Corralation between Franklin Electric and Enerpac Tool

Given the investment horizon of 90 days Franklin Electric is expected to generate 1.09 times less return on investment than Enerpac Tool. But when comparing it to its historical volatility, Franklin Electric Co is 1.22 times less risky than Enerpac Tool. It trades about 0.25 of its potential returns per unit of risk. Enerpac Tool Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,359  in Enerpac Tool Group on December 30, 2023 and sell it today you would earn a total of  207.00  from holding Enerpac Tool Group or generate 6.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Franklin Electric Co  vs.  Enerpac Tool Group

 Performance 
       Timeline  
Franklin Electric 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Electric Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Franklin Electric exhibited solid returns over the last few months and may actually be approaching a breakup point.
Enerpac Tool Group 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enerpac Tool exhibited solid returns over the last few months and may actually be approaching a breakup point.

Franklin Electric and Enerpac Tool Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Electric and Enerpac Tool

The main advantage of trading using opposite Franklin Electric and Enerpac Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric position performs unexpectedly, Enerpac Tool 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 Enerpac Tool will offset losses from the drop in Enerpac Tool's long position.
The idea behind Franklin Electric Co and Enerpac Tool Group 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.
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

Other Complementary Tools

Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format