Correlation Between Upstart Holdings and Lifeist Wellness

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

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

Diversification Opportunities for Upstart Holdings and Lifeist Wellness

-0.54

Correlation Coefficient

Upstart Holdings  Lifeist Wellness

Excellent diversification

The 3 months correlation between Upstart and Lifeist is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings and Lifeist Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeist Wellness and Upstart Holdings 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 Upstart Holdings are associated (or correlated) with Lifeist Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeist Wellness has no effect on the direction of Upstart Holdings i.e., Upstart Holdings and Lifeist Wellness go up and down completely randomly.

Pair Corralation between Upstart Holdings and Lifeist Wellness

Given the investment horizon of 90 days Upstart Holdings is expected to under-perform the Lifeist Wellness. But the stock apears to be less risky and, when comparing its historical volatility, Upstart Holdings is 1.76 times less risky than Lifeist Wellness. The stock trades about -0.03 of its potential returns per unit of risk. The Lifeist Wellness is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2.30  in Lifeist Wellness on October 27, 2024 and sell it today you would earn a total of  0.58  from holding Lifeist Wellness or generate 25.22% return on investment over 90 days.

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

Upstart Holdings  vs.  Lifeist Wellness

Upstart Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Upstart Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Upstart Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lifeist Wellness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifeist Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lifeist Wellness is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Upstart Holdings and Lifeist Wellness

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

The idea behind Upstart Holdings and Lifeist Wellness 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.