Correlation Between Life Time and Hyatt Hotels

Can any of the company-specific risk be diversified away by investing in both Life Time and Hyatt Hotels 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 Hyatt Hotels 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 Hyatt Hotels, you can compare the effects of market volatilities on Life Time and Hyatt Hotels 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 Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Hyatt Hotels.

Diversification Opportunities for Life Time and Hyatt Hotels

0.18

Correlation Coefficient

Life Time  Hyatt Hotels

Average diversification

The 3 months correlation between Life and Hyatt is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels 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 Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of Life Time i.e., Life Time and Hyatt Hotels go up and down completely randomly.

Pair Corralation between Life Time and Hyatt Hotels

Considering the 90-day investment horizon Life Time Group is expected to under-perform the Hyatt Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Life Time Group is 1.05 times less risky than Hyatt Hotels. The stock trades about -0.16 of its potential returns per unit of risk. The Hyatt Hotels is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  15,727  in Hyatt Hotels on September 12, 2024 and sell it today you would earn a total of  195.00  from holding Hyatt Hotels or generate 1.24% return on investment over 90 days.

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

Life Time Group  vs.  Hyatt Hotels

Life Time Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Time Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Life Time is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Hyatt Hotels

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical indicators, Hyatt Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Life Time and Hyatt Hotels

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

The idea behind Life Time Group and Hyatt Hotels 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 Commodity Directory module to find actively traded commodities issued by global exchanges.