Correlation Between Life Time and Clarus Corp

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

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

Diversification Opportunities for Life Time and Clarus Corp

0.03

Correlation Coefficient

Life Time  Clarus Corp

Significant diversification

The 3 months correlation between Life and Clarus is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Clarus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarus Corp and Life Time 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 Life Time Group are associated (or correlated) with Clarus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarus Corp has no effect on the direction of Life Time i.e., Life Time and Clarus Corp go up and down completely randomly.

Pair Corralation between Life Time and Clarus Corp

Considering the 90-day investment horizon Life Time Group is expected to generate 0.99 times more return on investment than Clarus Corp. However, Life Time Group is 1.01 times less risky than Clarus Corp. It trades about 0.24 of its potential returns per unit of risk. Clarus Corp is currently generating about -0.09 per unit of risk. If you would invest  2,188  in Life Time Group on December 28, 2024 and sell it today you would earn a total of  862.00  from holding Life Time Group or generate 39.4% return on investment over 90 days.

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

Life Time Group  vs.  Clarus Corp

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 18 (%) 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.

Clarus Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clarus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Life Time and Clarus Corp

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

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