Correlation Between Life Time and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Life Time and Emerson Radio 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 Emerson Radio 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 Emerson Radio, you can compare the effects of market volatilities on Life Time and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Emerson Radio.
Diversification Opportunities for Life Time and Emerson Radio
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Life and Emerson is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Life Time i.e., Life Time and Emerson Radio go up and down completely randomly.
Pair Corralation between Life Time and Emerson Radio
Considering the 90-day investment horizon Life Time Group is expected to generate 0.64 times more return on investment than Emerson Radio. However, Life Time Group is 1.56 times less risky than Emerson Radio. It trades about 0.19 of its potential returns per unit of risk. Emerson Radio is currently generating about -0.27 per unit of risk. If you would invest 2,300 in Life Time Group on August 28, 2024 and sell it today you would earn a total of 169.00 from holding Life Time Group or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Emerson Radio
Performance |
| Timeline |
| Life Time Group |
| Emerson Radio |
Life Time and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Emerson Radio
The main advantage of trading using opposite Life Time and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Life Time vs. Bowlero Corp | Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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