Correlation Between Life Time and Universal Display
Can any of the company-specific risk be diversified away by investing in both Life Time and Universal Display 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 Universal Display 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 Universal Display, you can compare the effects of market volatilities on Life Time and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Universal Display.
Diversification Opportunities for Life Time and Universal Display
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Life and Universal is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of Life Time i.e., Life Time and Universal Display go up and down completely randomly.
Pair Corralation between Life Time and Universal Display
Considering the 90-day investment horizon Life Time Group is expected to generate 1.18 times more return on investment than Universal Display. However, Life Time is 1.18 times more volatile than Universal Display. It trades about 0.06 of its potential returns per unit of risk. Universal Display is currently generating about 0.04 per unit of risk. If you would invest 1,258 in Life Time Group on August 24, 2024 and sell it today you would earn a total of 1,197 from holding Life Time Group or generate 95.15% 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. Universal Display
Performance |
| Timeline |
| Life Time Group |
| Universal Display |
Life Time and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Universal Display
The main advantage of trading using opposite Life Time and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.| Life Time vs. Bowlero Corp | Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness |
| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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