Correlation Between Life Time and NBCUNIVERSAL

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

Diversification Opportunities for Life Time and NBCUNIVERSAL

-0.08

Correlation Coefficient

Life Time  NBCUNIVERSAL

Good diversification

The 3 months correlation between Life and NBCUNIVERSAL is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of Life Time i.e., Life Time and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between Life Time and NBCUNIVERSAL

Considering the 90-day investment horizon Life Time is expected to generate 58.8 times less return on investment than NBCUNIVERSAL. But when comparing it to its historical volatility, Life Time Group is 36.57 times less risky than NBCUNIVERSAL. It trades about 0.06 of its potential returns per unit of risk. NBCUNIVERSAL MEDIA LLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,792  in NBCUNIVERSAL MEDIA LLC on September 25, 2024 and sell it today you would earn a total of  0.00  from holding NBCUNIVERSAL MEDIA LLC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.23%
Values	Daily Returns

Life Time Group  vs.  NBCUNIVERSAL MEDIA LLC

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 latest abnormal performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NBCUNIVERSAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Life Time and NBCUNIVERSAL

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

The idea behind Life Time Group and NBCUNIVERSAL MEDIA LLC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.