Correlation Between Amedisys and Lifestance Health

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

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

Diversification Opportunities for Amedisys and Lifestance Health

-0.51

Correlation Coefficient

Amedisys  Lifestance Health

Excellent diversification

The 3 months correlation between Amedisys and Lifestance is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and Lifestance Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestance Health and Amedisys 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 Amedisys are associated (or correlated) with Lifestance Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestance Health has no effect on the direction of Amedisys i.e., Amedisys and Lifestance Health go up and down completely randomly.

Pair Corralation between Amedisys and Lifestance Health

Given the investment horizon of 90 days Amedisys is expected to under-perform the Lifestance Health. But the stock apears to be less risky and, when comparing its historical volatility, Amedisys is 2.81 times less risky than Lifestance Health. The stock trades about -0.06 of its potential returns per unit of risk. The Lifestance Health Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  508.00  in Lifestance Health Group on October 4, 2024 and sell it today you would earn a total of  229.00  from holding Lifestance Health Group or generate 45.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Amedisys  vs.  Lifestance Health Group

Amedisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amedisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Amedisys is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Lifestance Health

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lifestance Health Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Lifestance Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Amedisys and Lifestance Health

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

The idea behind Amedisys and Lifestance Health 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.