Correlation Between Franklin Covey and FTI Consulting

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

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

Diversification Opportunities for Franklin Covey and FTI Consulting

-0.23

Correlation Coefficient

Franklin Covey  FTI Consulting

Very good diversification

The 3 months correlation between Franklin and FTI is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey and FTI Consulting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTI Consulting and Franklin Covey 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 Covey are associated (or correlated) with FTI Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTI Consulting has no effect on the direction of Franklin Covey i.e., Franklin Covey and FTI Consulting go up and down completely randomly.

Pair Corralation between Franklin Covey and FTI Consulting

Allowing for the 90-day total investment horizon Franklin Covey is expected to under-perform the FTI Consulting. In addition to that, Franklin Covey is 1.84 times more volatile than FTI Consulting. It trades about -0.01 of its total potential returns per unit of risk. FTI Consulting is currently generating about 0.06 per unit of volatility. If you would invest  21,610  in FTI Consulting on February 23, 2024 and sell it today you would earn a total of  805.00  from holding FTI Consulting or generate 3.73% return on investment over 90 days.

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

Franklin Covey  vs.  FTI Consulting

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.

FTI Consulting

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FTI Consulting are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, FTI Consulting is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Franklin Covey and FTI Consulting

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

The idea behind Franklin Covey and FTI Consulting 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.