Correlation Between Life Time and National Beverage
Can any of the company-specific risk be diversified away by investing in both Life Time and National Beverage 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 National Beverage 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 National Beverage Corp, you can compare the effects of market volatilities on Life Time and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and National Beverage.
Diversification Opportunities for Life Time and National Beverage
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Life and National is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Life Time i.e., Life Time and National Beverage go up and down completely randomly.
Pair Corralation between Life Time and National Beverage
Considering the 90-day investment horizon Life Time Group is expected to generate 1.15 times more return on investment than National Beverage. However, Life Time is 1.15 times more volatile than National Beverage Corp. It trades about 0.16 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.04 per unit of risk. If you would invest 2,971 in Life Time Group on December 5, 2024 and sell it today you would earn a total of 172.00 from holding Life Time Group or generate 5.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Life Time Group vs. National Beverage Corp
Performance |
Timeline |
Life Time Group |
National Beverage Corp |
Life Time and National Beverage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Life Time and National Beverage
The main advantage of trading using opposite Life Time and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness | Life Time vs. Mattel Inc |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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