Correlation Between Life Time and Franklin Wireless
Can any of the company-specific risk be diversified away by investing in both Life Time and Franklin Wireless 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 Life Time and Franklin Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Time Group and Franklin Wireless Corp, you can compare the effects of market volatilities on Life Time and Franklin Wireless 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 Life Time with a short position of Franklin Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Franklin Wireless.
Diversification Opportunities for Life Time and Franklin Wireless
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Life and Franklin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp and Life Time 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 Life Time Group are associated (or correlated) with Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of Life Time i.e., Life Time and Franklin Wireless go up and down completely randomly.
Pair Corralation between Life Time and Franklin Wireless
Considering the 90-day investment horizon Life Time Group is expected to generate 1.09 times more return on investment than Franklin Wireless. However, Life Time is 1.09 times more volatile than Franklin Wireless Corp. It trades about 0.1 of its potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.07 per unit of risk. If you would invest 1,443 in Life Time Group on September 2, 2024 and sell it today you would earn a total of 984.00 from holding Life Time Group or generate 68.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Franklin Wireless Corp
Performance |
| Timeline |
| Life Time Group |
| Franklin Wireless Corp |
Life Time and Franklin Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Franklin Wireless
The main advantage of trading using opposite Life Time and Franklin Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, Franklin Wireless 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 Wireless will offset losses from the drop in Franklin Wireless' long position.The idea behind Life Time Group and Franklin Wireless Corp 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.| Franklin Wireless vs. Wialan Technologies | Franklin Wireless vs. TPT Global Tech | Franklin Wireless vs. Moving iMage Technologies | Franklin Wireless vs. Comtech Telecommunications Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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