Correlation Between Life Time and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Life Time and Academy Sports 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 Life Time and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Time Group and Academy Sports Outdoors, you can compare the effects of market volatilities on Life Time and Academy Sports 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 Life Time with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Academy Sports.
Diversification Opportunities for Life Time and Academy Sports
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Life and Academy is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Academy Sports Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdoors and Life Time 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 Life Time Group are associated (or correlated) with Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports Outdoors has no effect on the direction of Life Time i.e., Life Time and Academy Sports go up and down completely randomly.
Pair Corralation between Life Time and Academy Sports
Considering the 90-day investment horizon Life Time Group is expected to generate 1.19 times more return on investment than Academy Sports. However, Life Time is 1.19 times more volatile than Academy Sports Outdoors. It trades about 0.06 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about 0.0 per unit of risk. If you would invest 1,314 in Life Time Group on August 29, 2024 and sell it today you would earn a total of 1,148 from holding Life Time Group or generate 87.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Academy Sports Outdoors
Performance |
| Timeline |
| Life Time Group |
| Academy Sports Outdoors |
Life Time and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Academy Sports
The main advantage of trading using opposite Life Time and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, Academy Sports 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 Academy Sports will offset losses from the drop in Academy Sports' long position.| Life Time vs. Bowlero Corp | Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness |
| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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