Correlation Between Link Real and Life Time

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

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

Diversification Opportunities for Link Real and Life Time

-0.19

Correlation Coefficient

Link Real  Life Time

Good diversification

The 3 months correlation between Link and Life is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Link Real Estate 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 Link Real 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 Link Real Estate 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 Link Real i.e., Link Real and Life Time go up and down completely randomly.

Pair Corralation between Link Real and Life Time

Assuming the 90 days horizon Link Real is expected to generate 2.69 times less return on investment than Life Time. In addition to that, Link Real is 1.12 times more volatile than Life Time Group. It trades about 0.1 of its total potential returns per unit of risk. Life Time Group is currently generating about 0.3 per unit of volatility. If you would invest  2,192  in Life Time Group on December 27, 2024 and sell it today you would earn a total of  1,065  from holding Life Time Group or generate 48.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

Link Real Estate  vs.  Life Time Group

Link Real Estate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Link Real Estate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Link Real reported solid returns over the last few months and may actually be approaching a breakup point.

Life Time Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Life Time Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Life Time demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Link Real and Life Time

The main advantage of trading using opposite Link Real and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Real 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 Link Real Estate 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.