Correlation Between Life Time and GigCapital5

Can any of the company-specific risk be diversified away by investing in both Life Time and GigCapital5 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 GigCapital5 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 GigCapital5, you can compare the effects of market volatilities on Life Time and GigCapital5 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 GigCapital5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and GigCapital5.

Diversification Opportunities for Life Time and GigCapital5

0.55

Correlation Coefficient

Life Time  GigCapital5

Very weak diversification

The 3 months correlation between Life and GigCapital5 is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and GigCapital5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigCapital5 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 GigCapital5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigCapital5 has no effect on the direction of Life Time i.e., Life Time and GigCapital5 go up and down completely randomly.

Pair Corralation between Life Time and GigCapital5

If you would invest  2,355  in Life Time Group on October 11, 2024 and sell it today you would earn a total of  3.00  from holding Life Time Group or generate 0.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Life Time Group  vs.  GigCapital5

Life Time Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Time Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Life Time is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

GigCapital5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GigCapital5 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, GigCapital5 is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Life Time and GigCapital5

The main advantage of trading using opposite Life Time and GigCapital5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, GigCapital5 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 GigCapital5 will offset losses from the drop in GigCapital5's long position.

The idea behind Life Time Group and GigCapital5 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.