Correlation Between Vodka Brands and Life Time

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

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

Diversification Opportunities for Vodka Brands and Life Time

0.07

Correlation Coefficient

Vodka Brands  Life Time

Significant diversification

The 3 months correlation between Vodka and Life is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group and Vodka Brands 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 Vodka Brands Corp are associated (or correlated) with Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Vodka Brands i.e., Vodka Brands and Life Time go up and down completely randomly.

Pair Corralation between Vodka Brands and Life Time

Given the investment horizon of 90 days Vodka Brands Corp is expected to under-perform the Life Time. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vodka Brands Corp is 1.48 times less risky than Life Time. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Life Time Group is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  2,371  in Life Time Group on September 16, 2024 and sell it today you would lose (96.00) from holding Life Time Group or give up 4.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Vodka Brands Corp  vs.  Life Time Group

Vodka Brands Corp

Risk-Adjusted Performance

1 of 100

Weak

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

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 fairly strong basic indicators, Life Time is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Vodka Brands and Life Time

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

The idea behind Vodka Brands Corp and Life Time 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.