Correlation Between CRA International and Franklin Covey

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

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

Diversification Opportunities for CRA International and Franklin Covey

-0.46

Correlation Coefficient

CRA International  Franklin Covey

Very good diversification

The 3 months correlation between CRA and Franklin is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and Franklin Covey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Covey and CRA International 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 CRA International are associated (or correlated) with Franklin Covey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Covey has no effect on the direction of CRA International i.e., CRA International and Franklin Covey go up and down completely randomly.

Pair Corralation between CRA International and Franklin Covey

Given the investment horizon of 90 days CRA International is expected to under-perform the Franklin Covey. But the stock apears to be less risky and, when comparing its historical volatility, CRA International is 2.04 times less risky than Franklin Covey. The stock trades about -0.11 of its potential returns per unit of risk. The Franklin Covey is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,760  in Franklin Covey on February 1, 2024 and sell it today you would earn a total of  134.00  from holding Franklin Covey or generate 3.56% return on investment over 90 days.

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

CRA International  vs.  Franklin Covey

CRA International

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CRA International are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CRA International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Franklin Covey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Covey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Franklin Covey is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CRA International and Franklin Covey

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

The idea behind CRA International and Franklin Covey 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.