Correlation Between LifePoint and Sable Offshore

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

By analyzing existing cross correlation between LifePoint Health 4375 and Sable Offshore Corp, you can compare the effects of market volatilities on LifePoint and Sable Offshore 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 LifePoint with a short position of Sable Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of LifePoint and Sable Offshore.

Diversification Opportunities for LifePoint and Sable Offshore

0.35

Correlation Coefficient

LifePoint  Sable Offshore

Weak diversification

The 3 months correlation between LifePoint and Sable is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding LifePoint Health 4375 and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp and LifePoint 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 LifePoint Health 4375 are associated (or correlated) with Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of LifePoint i.e., LifePoint and Sable Offshore go up and down completely randomly.

Pair Corralation between LifePoint and Sable Offshore

Assuming the 90 days trading horizon LifePoint Health 4375 is expected to generate 0.41 times more return on investment than Sable Offshore. However, LifePoint Health 4375 is 2.42 times less risky than Sable Offshore. It trades about -0.03 of its potential returns per unit of risk. Sable Offshore Corp is currently generating about -0.04 per unit of risk. If you would invest  9,824  in LifePoint Health 4375 on September 18, 2024 and sell it today you would lose (439.00) from holding LifePoint Health 4375 or give up 4.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

LifePoint Health 4375  vs.  Sable Offshore Corp

LifePoint Health 4375

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LifePoint Health 4375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LifePoint is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with LifePoint and Sable Offshore

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

The idea behind LifePoint Health 4375 and Sable Offshore 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.