Correlation Between Life Time and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Life Time and NETGEAR 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 NETGEAR 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 NETGEAR, you can compare the effects of market volatilities on Life Time and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and NETGEAR.
Diversification Opportunities for Life Time and NETGEAR
Average diversification
The 3 months correlation between Life and NETGEAR is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Life Time i.e., Life Time and NETGEAR go up and down completely randomly.
Pair Corralation between Life Time and NETGEAR
Considering the 90-day investment horizon Life Time is expected to generate 1.35 times less return on investment than NETGEAR. But when comparing it to its historical volatility, Life Time Group is 1.19 times less risky than NETGEAR. It trades about 0.25 of its potential returns per unit of risk. NETGEAR is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,192 in NETGEAR on September 1, 2024 and sell it today you would earn a total of 268.00 from holding NETGEAR or generate 12.23% 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. NETGEAR
Performance |
| Timeline |
| Life Time Group |
| NETGEAR |
Life Time and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and NETGEAR
The main advantage of trading using opposite Life Time and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| Life Time vs. The Wendys Co | Life Time vs. Shake Shack | Life Time vs. Papa Johns International | Life Time vs. Darden Restaurants |
| NETGEAR vs. Comtech Telecommunications Corp | NETGEAR vs. KVH Industries | NETGEAR vs. Silicom | NETGEAR vs. Knowles Cor |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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