Correlation Between InnovAge Holding and Lifestance Health
Can any of the company-specific risk be diversified away by investing in both InnovAge Holding 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 InnovAge Holding and Lifestance Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InnovAge Holding Corp and Lifestance Health Group, you can compare the effects of market volatilities on InnovAge Holding 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 InnovAge Holding with a short position of Lifestance Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of InnovAge Holding and Lifestance Health.
Diversification Opportunities for InnovAge Holding and Lifestance Health
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InnovAge and Lifestance is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and Lifestance Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestance Health and InnovAge Holding 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 InnovAge Holding Corp 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 InnovAge Holding i.e., InnovAge Holding and Lifestance Health go up and down completely randomly.
Pair Corralation between InnovAge Holding and Lifestance Health
Given the investment horizon of 90 days InnovAge Holding Corp is expected to under-perform the Lifestance Health. In addition to that, InnovAge Holding is 1.41 times more volatile than Lifestance Health Group. It trades about -0.4 of its total potential returns per unit of risk. Lifestance Health Group is currently generating about 0.34 per unit of volatility. If you would invest 726.00 in Lifestance Health Group on October 22, 2024 and sell it today you would earn a total of 73.00 from holding Lifestance Health Group or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InnovAge Holding Corp vs. Lifestance Health Group
Performance |
| Timeline |
| InnovAge Holding Corp |
| Lifestance Health |
InnovAge Holding and Lifestance Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InnovAge Holding and Lifestance Health
The main advantage of trading using opposite InnovAge Holding and Lifestance Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InnovAge Holding 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.| InnovAge Holding vs. The Ensign Group | InnovAge Holding vs. Select Medical Holdings | InnovAge Holding vs. Encompass Health Corp | InnovAge Holding vs. Enhabit |
| Lifestance Health vs. Pennant Group | Lifestance Health vs. Encompass Health Corp | Lifestance Health vs. Enhabit | Lifestance Health vs. Concord Medical Services |
Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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