Correlation Between Franklin Dynatech and Lifex Income

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

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

Diversification Opportunities for Franklin Dynatech and Lifex Income

0.0

Correlation Coefficient

Franklin Dynatech  Lifex Income

Pay attention - limited upside

The 3 months correlation between Franklin and Lifex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Dynatech Fund and Lifex Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Income and Franklin Dynatech 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 Dynatech Fund are associated (or correlated) with Lifex Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Income has no effect on the direction of Franklin Dynatech i.e., Franklin Dynatech and Lifex Income go up and down completely randomly.

Pair Corralation between Franklin Dynatech and Lifex Income

Assuming the 90 days horizon Franklin Dynatech Fund is expected to generate 1.91 times more return on investment than Lifex Income. However, Franklin Dynatech is 1.91 times more volatile than Lifex Income. It trades about 0.1 of its potential returns per unit of risk. Lifex Income is currently generating about 0.0 per unit of risk. If you would invest  10,453  in Franklin Dynatech Fund on October 7, 2024 and sell it today you would earn a total of  8,582  from holding Franklin Dynatech Fund or generate 82.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	49.19%
Values	Daily Returns

Franklin Dynatech Fund  vs.  Lifex Income

Franklin Dynatech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Dynatech Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Franklin Dynatech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lifex Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifex Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Lifex Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Dynatech and Lifex Income

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

The idea behind Franklin Dynatech Fund and Lifex Income 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.