Correlation Between Freedom Holding and Life Time
Can any of the company-specific risk be diversified away by investing in both Freedom Holding and Life Time 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 Freedom Holding and Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Holding Corp and Life Time Group, you can compare the effects of market volatilities on Freedom Holding and Life Time 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 Freedom Holding with a short position of Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and Life Time.
Diversification Opportunities for Freedom Holding and Life Time
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and Life is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group and Freedom Holding 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 Freedom Holding Corp are associated (or correlated) with Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Freedom Holding i.e., Freedom Holding and Life Time go up and down completely randomly.
Pair Corralation between Freedom Holding and Life Time
Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 0.91 times more return on investment than Life Time. However, Freedom Holding Corp is 1.1 times less risky than Life Time. It trades about 0.19 of its potential returns per unit of risk. Life Time Group is currently generating about 0.14 per unit of risk. If you would invest 7,595 in Freedom Holding Corp on September 1, 2024 and sell it today you would earn a total of 4,293 from holding Freedom Holding Corp or generate 56.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Holding Corp vs. Life Time Group
Performance |
| Timeline |
| Freedom Holding Corp |
| Life Time Group |
Freedom Holding and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Holding and Life Time
The main advantage of trading using opposite Freedom Holding and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time's long position.| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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