Correlation Between Stryker and Lifestance Health

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

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

Diversification Opportunities for Stryker and Lifestance Health

0.63

Correlation Coefficient

Stryker  Lifestance Health

Poor diversification

The 3 months correlation between Stryker and Lifestance is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and Lifestance Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestance Health and Stryker 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 Stryker are associated (or correlated) with Lifestance Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestance Health has no effect on the direction of Stryker i.e., Stryker and Lifestance Health go up and down completely randomly.

Pair Corralation between Stryker and Lifestance Health

Considering the 90-day investment horizon Stryker is expected to generate 0.7 times more return on investment than Lifestance Health. However, Stryker is 1.42 times less risky than Lifestance Health. It trades about 0.02 of its potential returns per unit of risk. Lifestance Health Group is currently generating about -0.08 per unit of risk. If you would invest  36,142  in Stryker on December 30, 2024 and sell it today you would earn a total of  308.00  from holding Stryker or generate 0.85% return on investment over 90 days.

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

Stryker  vs.  Lifestance Health Group

Stryker

Risk-Adjusted Performance

Weak

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

Lifestance Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifestance Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Stryker and Lifestance Health

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

The idea behind Stryker and Lifestance Health Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..