Correlation Between Life Time and ScanSource
Can any of the company-specific risk be diversified away by investing in both Life Time and ScanSource 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 ScanSource 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 ScanSource, you can compare the effects of market volatilities on Life Time and ScanSource 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 ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and ScanSource.
Diversification Opportunities for Life Time and ScanSource
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Life and ScanSource is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Life Time i.e., Life Time and ScanSource go up and down completely randomly.
Pair Corralation between Life Time and ScanSource
Considering the 90-day investment horizon Life Time Group is expected to generate 0.89 times more return on investment than ScanSource. However, Life Time Group is 1.12 times less risky than ScanSource. It trades about 0.13 of its potential returns per unit of risk. ScanSource is currently generating about 0.06 per unit of risk. If you would invest 1,750 in Life Time Group on September 5, 2024 and sell it today you would earn a total of 662.00 from holding Life Time Group or generate 37.83% 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. ScanSource
Performance |
| Timeline |
| Life Time Group |
| ScanSource |
Life Time and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and ScanSource
The main advantage of trading using opposite Life Time and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, ScanSource 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 ScanSource will offset losses from the drop in ScanSource's long position.| Life Time vs. Hyatt Hotels | Life Time vs. Smart Share Global | Life Time vs. Sweetgreen | Life Time vs. Wyndham Hotels Resorts |
| ScanSource vs. Climb Global Solutions | ScanSource vs. Insight Enterprises | ScanSource vs. Synnex | ScanSource vs. PC Connection |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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