Correlation Between Franklin Electric and Kadant
Can any of the company-specific risk be diversified away by investing in both Franklin Electric and Kadant 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 Kadant 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 Kadant Inc, you can compare the effects of market volatilities on Franklin Electric and Kadant 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 Kadant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Kadant.
Diversification Opportunities for Franklin Electric and Kadant
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Kadant is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc 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 Kadant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kadant Inc has no effect on the direction of Franklin Electric i.e., Franklin Electric and Kadant go up and down completely randomly.
Pair Corralation between Franklin Electric and Kadant
Given the investment horizon of 90 days Franklin Electric Co is expected to generate 0.58 times more return on investment than Kadant. However, Franklin Electric Co is 1.73 times less risky than Kadant. It trades about -0.04 of its potential returns per unit of risk. Kadant Inc is currently generating about -0.08 per unit of risk. If you would invest 9,733 in Franklin Electric Co on September 7, 2025 and sell it today you would lose (321.00) from holding Franklin Electric Co or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Electric Co vs. Kadant Inc
Performance |
| Timeline |
| Franklin Electric |
| Kadant Inc |
Franklin Electric and Kadant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Electric and Kadant
The main advantage of trading using opposite Franklin Electric and Kadant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric position performs unexpectedly, Kadant 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 Kadant will offset losses from the drop in Kadant's long position.| Franklin Electric vs. American Eagle Outfitters | Franklin Electric vs. BBB Foods | Franklin Electric vs. Urban Outfitters | Franklin Electric vs. Suntory Beverage Food |
| Kadant vs. STRATEC Biomedical AG | Kadant vs. Todos Medical | Kadant vs. World of Wireless | Kadant vs. Union Medical Healthcare |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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