Correlation Between Life Time and Brunswick
Can any of the company-specific risk be diversified away by investing in both Life Time and Brunswick 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 Brunswick 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 Brunswick, you can compare the effects of market volatilities on Life Time and Brunswick 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 Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Brunswick.
Diversification Opportunities for Life Time and Brunswick
Very weak diversification
The 3 months correlation between Life and Brunswick is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick 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 Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of Life Time i.e., Life Time and Brunswick go up and down completely randomly.
Pair Corralation between Life Time and Brunswick
Considering the 90-day investment horizon Life Time Group is expected to generate 1.27 times more return on investment than Brunswick. However, Life Time is 1.27 times more volatile than Brunswick. It trades about 0.62 of its potential returns per unit of risk. Brunswick is currently generating about 0.04 per unit of risk. If you would invest 2,225 in Life Time Group on October 20, 2024 and sell it today you would earn a total of 542.00 from holding Life Time Group or generate 24.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Brunswick
Performance |
| Timeline |
| Life Time Group |
| Brunswick |
Life Time and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Brunswick
The main advantage of trading using opposite Life Time and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, Brunswick 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 Brunswick will offset losses from the drop in Brunswick's long position.| Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness | Life Time vs. Mattel Inc |
| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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