Correlation Between Privia Health and LifeMD

Can any of the company-specific risk be diversified away by investing in both Privia Health and LifeMD 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 Privia Health and LifeMD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Privia Health Group and LifeMD Inc, you can compare the effects of market volatilities on Privia Health and LifeMD 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 Privia Health with a short position of LifeMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Privia Health and LifeMD.

Diversification Opportunities for Privia Health and LifeMD

0.34

Correlation Coefficient

Privia Health  LifeMD

Weak diversification

The 3 months correlation between Privia and LifeMD is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Privia Health Group and LifeMD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeMD Inc and Privia Health 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 Privia Health Group are associated (or correlated) with LifeMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeMD Inc has no effect on the direction of Privia Health i.e., Privia Health and LifeMD go up and down completely randomly.

Pair Corralation between Privia Health and LifeMD

Given the investment horizon of 90 days Privia Health is expected to generate 1.36 times less return on investment than LifeMD. But when comparing it to its historical volatility, Privia Health Group is 3.48 times less risky than LifeMD. It trades about 0.13 of its potential returns per unit of risk. LifeMD Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  512.00  in LifeMD Inc on December 28, 2024 and sell it today you would earn a total of  33.00  from holding LifeMD Inc or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Privia Health Group  vs.  LifeMD Inc

Privia Health Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Privia Health sustained solid returns over the last few months and may actually be approaching a breakup point.

LifeMD Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LifeMD Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, LifeMD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Privia Health and LifeMD

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

The idea behind Privia Health Group and LifeMD Inc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.