Correlation Between Life Time and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Life Time and Scandinavian Tobacco 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group, you can compare the effects of market volatilities on Life Time and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Scandinavian Tobacco.
Diversification Opportunities for Life Time and Scandinavian Tobacco
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Life and Scandinavian is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Life Time i.e., Life Time and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Life Time and Scandinavian Tobacco
Considering the 90-day investment horizon Life Time Group is expected to generate 1.7 times more return on investment than Scandinavian Tobacco. However, Life Time is 1.7 times more volatile than Scandinavian Tobacco Group. It trades about 0.06 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.03 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Life Time Group |
| Scandinavian Tobacco |
Life Time and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Scandinavian Tobacco
The main advantage of trading using opposite Life Time and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Life Time vs. Bowlero Corp | Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness |
| Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. RLX Technology | Scandinavian Tobacco vs. British American Tobacco |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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