Correlation Between Lifestance Health and Option Care
Can any of the company-specific risk be diversified away by investing in both Lifestance Health and Option Care 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 Lifestance Health and Option Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestance Health Group and Option Care Health, you can compare the effects of market volatilities on Lifestance Health and Option Care 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 Lifestance Health with a short position of Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestance Health and Option Care.
Diversification Opportunities for Lifestance Health and Option Care
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lifestance and Option is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lifestance Health Group and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health and Lifestance 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 Lifestance Health Group are associated (or correlated) with Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of Lifestance Health i.e., Lifestance Health and Option Care go up and down completely randomly.
Pair Corralation between Lifestance Health and Option Care
Given the investment horizon of 90 days Lifestance Health Group is expected to generate 1.57 times more return on investment than Option Care. However, Lifestance Health is 1.57 times more volatile than Option Care Health. It trades about 0.03 of its potential returns per unit of risk. Option Care Health is currently generating about -0.03 per unit of risk. If you would invest 669.00 in Lifestance Health Group on September 3, 2024 and sell it today you would earn a total of 83.00 from holding Lifestance Health Group or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifestance Health Group vs. Option Care Health
Performance |
| Timeline |
| Lifestance Health |
| Option Care Health |
Lifestance Health and Option Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifestance Health and Option Care
The main advantage of trading using opposite Lifestance Health and Option Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestance Health position performs unexpectedly, Option Care 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 Option Care will offset losses from the drop in Option Care's long position.| Lifestance Health vs. Pennant Group | Lifestance Health vs. Encompass Health Corp | Lifestance Health vs. Enhabit | Lifestance Health vs. Concord Medical Services |
| Option Care vs. Addus HomeCare | Option Care vs. Acadia Healthcare | Option Care vs. Encompass Health Corp | Option Care vs. Select Medical Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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