Correlation Between Life Time and MORGAN

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

Diversification Opportunities for Life Time and MORGAN

0.14

Correlation Coefficient

Life Time  MORGAN

Average diversification

The 3 months correlation between Life and MORGAN is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and MORGAN STANLEY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MORGAN STANLEY 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 MORGAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MORGAN STANLEY has no effect on the direction of Life Time i.e., Life Time and MORGAN go up and down completely randomly.

Pair Corralation between Life Time and MORGAN

Considering the 90-day investment horizon Life Time Group is expected to generate 15.25 times more return on investment than MORGAN. However, Life Time is 15.25 times more volatile than MORGAN STANLEY. It trades about 0.02 of its potential returns per unit of risk. MORGAN STANLEY is currently generating about 0.05 per unit of risk. If you would invest  2,351  in Life Time Group on October 10, 2024 and sell it today you would earn a total of  7.00  from holding Life Time Group or generate 0.3% 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.  MORGAN STANLEY

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.

MORGAN STANLEY

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MORGAN STANLEY are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MORGAN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Life Time and MORGAN

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

The idea behind Life Time Group and MORGAN STANLEY 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 Transaction History module to view history of all your transactions and understand their impact on performance.