Correlation Between Lifestance Health and Cross Country

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

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

Diversification Opportunities for Lifestance Health and Cross Country

0.77

Correlation Coefficient

Lifestance Health  Cross Country

Poor diversification

The 3 months correlation between Lifestance and Cross is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lifestance Health Group and Cross Country Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cross Country Healthcare and Lifestance Health 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 Lifestance Health Group are associated (or correlated) with Cross Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cross Country Healthcare has no effect on the direction of Lifestance Health i.e., Lifestance Health and Cross Country go up and down completely randomly.

Pair Corralation between Lifestance Health and Cross Country

Given the investment horizon of 90 days Lifestance Health Group is expected to generate 1.53 times more return on investment than Cross Country. However, Lifestance Health is 1.53 times more volatile than Cross Country Healthcare. It trades about -0.08 of its potential returns per unit of risk. Cross Country Healthcare is currently generating about -0.25 per unit of risk. If you would invest  740.00  in Lifestance Health Group on December 29, 2024 and sell it today you would lose (70.00) from holding Lifestance Health Group or give up 9.46% of portfolio value over 90 days.

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

Lifestance Health Group  vs.  Cross Country Healthcare

Lifestance Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifestance Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cross Country Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cross Country Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Lifestance Health and Cross Country

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

The idea behind Lifestance Health Group and Cross Country Healthcare 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.