Correlation Between Life Time and NORTHERN

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

Diversification Opportunities for Life Time and NORTHERN

0.62

Correlation Coefficient

Life Time  NORTHERN

Poor diversification

The 3 months correlation between Life and NORTHERN is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and NORTHERN TRUST PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHERN TRUST PORATION 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 NORTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHERN TRUST PORATION has no effect on the direction of Life Time i.e., Life Time and NORTHERN go up and down completely randomly.

Pair Corralation between Life Time and NORTHERN

Considering the 90-day investment horizon Life Time Group is expected to generate 5.31 times more return on investment than NORTHERN. However, Life Time is 5.31 times more volatile than NORTHERN TRUST PORATION. It trades about 0.06 of its potential returns per unit of risk. NORTHERN TRUST PORATION is currently generating about 0.03 per unit of risk. If you would invest  1,548  in Life Time Group on October 5, 2024 and sell it today you would earn a total of  731.00  from holding Life Time Group or generate 47.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.03%
Values	Daily Returns

Life Time Group  vs.  NORTHERN TRUST PORATION

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.

NORTHERN TRUST PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORTHERN TRUST PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NORTHERN TRUST PORATION investors.

Pair Trading with Life Time and NORTHERN

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

The idea behind Life Time Group and NORTHERN TRUST PORATION 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.