Correlation Between Life Time and Sacks Parente

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

Diversification Opportunities for Life Time and Sacks Parente

0.46

Correlation Coefficient

Life Time  Sacks Parente

Very weak diversification

The 3 months correlation between Life and Sacks is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Sacks Parente Golf, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sacks Parente Golf, 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 Sacks Parente. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sacks Parente Golf, has no effect on the direction of Life Time i.e., Life Time and Sacks Parente go up and down completely randomly.

Pair Corralation between Life Time and Sacks Parente

Considering the 90-day investment horizon Life Time Group is expected to generate 0.1 times more return on investment than Sacks Parente. However, Life Time Group is 10.36 times less risky than Sacks Parente. It trades about 0.3 of its potential returns per unit of risk. Sacks Parente Golf, is currently generating about 0.01 per unit of risk. 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 Together
Strength	Weak
Accuracy	88.33%
Values	Daily Returns

Life Time Group  vs.  Sacks Parente Golf,

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.

Sacks Parente Golf,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sacks Parente Golf, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, Sacks Parente exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Life Time and Sacks Parente

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

The idea behind Life Time Group and Sacks Parente Golf, 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..