Correlation Between Lifestance Health and Select Medical

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

Diversification Opportunities for Lifestance Health and Select Medical

0.71

Correlation Coefficient

Lifestance Health  Select Medical

Poor diversification

The 3 months correlation between Lifestance and Select is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lifestance Health Group and Select Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Medical Holdings 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 Select Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Medical Holdings has no effect on the direction of Lifestance Health i.e., Lifestance Health and Select Medical go up and down completely randomly.

Pair Corralation between Lifestance Health and Select Medical

Given the investment horizon of 90 days Lifestance Health is expected to generate 1.8 times less return on investment than Select Medical. In addition to that, Lifestance Health is 1.57 times more volatile than Select Medical Holdings. It trades about 0.03 of its total potential returns per unit of risk. Select Medical Holdings is currently generating about 0.08 per unit of volatility. If you would invest  1,253  in Select Medical Holdings on September 28, 2024 and sell it today you would earn a total of  687.00  from holding Select Medical Holdings or generate 54.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.63%
Values	Daily Returns

Lifestance Health Group  vs.  Select Medical Holdings

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 fragile basic indicators, Lifestance Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Select Medical Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Select Medical Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Select Medical is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lifestance Health and Select Medical

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

The idea behind Lifestance Health Group and Select Medical Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.