Correlation Between United States and Life Time

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

By analyzing existing cross correlation between United States Steel and Life Time Group, you can compare the effects of market volatilities on United States 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 United States with a short position of Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Life Time.

Diversification Opportunities for United States and Life Time

0.0

Correlation Coefficient

United States  Life Time

Pay attention - limited upside

The 3 months correlation between United and Life is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and Life Time go up and down completely randomly.

Pair Corralation between United States and Life Time

Taking into account the 90-day investment horizon United States Steel is expected to under-perform the Life Time. In addition to that, United States is 1.47 times more volatile than Life Time Group. It trades about -0.03 of its total potential returns per unit of risk. Life Time Group is currently generating about -0.05 per unit of volatility. If you would invest  2,446  in Life Time Group on September 16, 2024 and sell it today you would lose (171.00) from holding Life Time Group or give up 6.99% of portfolio value over 90 days.

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

United States Steel  vs.  Life Time Group

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, United States is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with United States and Life Time

The main advantage of trading using opposite United States and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.

The idea behind United States Steel and Life Time Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.