Correlation Between Life Time and SOUTHERN

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

Diversification Opportunities for Life Time and SOUTHERN

0.36

Correlation Coefficient

Life Time  SOUTHERN

Weak diversification

The 3 months correlation between Life and SOUTHERN is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and SOUTHERN PER CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN PER P 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN PER P has no effect on the direction of Life Time i.e., Life Time and SOUTHERN go up and down completely randomly.

Pair Corralation between Life Time and SOUTHERN

Considering the 90-day investment horizon Life Time Group is expected to generate 2.9 times more return on investment than SOUTHERN. However, Life Time is 2.9 times more volatile than SOUTHERN PER CORP. It trades about 0.06 of its potential returns per unit of risk. SOUTHERN PER CORP is currently generating about 0.02 per unit of risk. If you would invest  2,595  in Life Time Group on October 22, 2024 and sell it today you would earn a total of  172.00  from holding Life Time Group or generate 6.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.87%
Values	Daily Returns

Life Time Group  vs.  SOUTHERN PER CORP

Life Time Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Life Time Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Life Time may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SOUTHERN PER P

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SOUTHERN PER CORP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Life Time and SOUTHERN

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

The idea behind Life Time Group and SOUTHERN PER CORP 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.