Correlation Between Life Time and Sphere Entertainment

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

Diversification Opportunities for Life Time and Sphere Entertainment

0.13

Correlation Coefficient

Life Time  Sphere Entertainment

Average diversification

The 3 months correlation between Life and Sphere is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Life Time i.e., Life Time and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Life Time and Sphere Entertainment

Considering the 90-day investment horizon Life Time Group is expected to generate 0.78 times more return on investment than Sphere Entertainment. However, Life Time Group is 1.27 times less risky than Sphere Entertainment. It trades about 0.28 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.08 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  985.00  from holding Life Time Group or generate 45.02% 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.  Sphere Entertainment Co

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 21 (%) 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.

Sphere Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical 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 Sphere Entertainment

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

The idea behind Life Time Group and Sphere Entertainment Co 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 CEOs Directory module to screen CEOs from public companies around the world.