Correlation Between Franklin Covey and Northwest Bancshares

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Can any of the company-specific risk be diversified away by investing in both Franklin Covey and Northwest Bancshares 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 Northwest Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Covey and Northwest Bancshares, you can compare the effects of market volatilities on Franklin Covey and Northwest Bancshares 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 Northwest Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Covey and Northwest Bancshares.

Diversification Opportunities for Franklin Covey and Northwest Bancshares

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Franklin and Northwest is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey and Northwest Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Bancshares 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 Northwest Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Bancshares has no effect on the direction of Franklin Covey i.e., Franklin Covey and Northwest Bancshares go up and down completely randomly.

Pair Corralation between Franklin Covey and Northwest Bancshares

Allowing for the 90-day total investment horizon Franklin Covey is expected to generate 1.3 times more return on investment than Northwest Bancshares. However, Franklin Covey is 1.3 times more volatile than Northwest Bancshares. It trades about -0.06 of its potential returns per unit of risk. Northwest Bancshares is currently generating about -0.12 per unit of risk. If you would invest  4,712  in Franklin Covey on July 1, 2022 and sell it today you would lose (140.00)  from holding Franklin Covey or give up 2.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Franklin Covey  vs.  Northwest Bancshares

 Performance (%) 
       Timeline  
Franklin Covey 
Franklin Performance
0 of 100
Over the last 90 days Franklin Covey has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Franklin Covey is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Franklin Price Channel

Northwest Bancshares 
Northwest Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Northwest Bancshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Northwest Bancshares is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Northwest Price Channel

Franklin Covey and Northwest Bancshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Covey and Northwest Bancshares

The main advantage of trading using opposite Franklin Covey and Northwest Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Covey position performs unexpectedly, Northwest Bancshares 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 Northwest Bancshares will offset losses from the drop in Northwest Bancshares' long position.
Franklin Covey vs. Amazon Inc
The idea behind Franklin Covey and Northwest Bancshares 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.
Northwest Bancshares vs. Amazon Inc
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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