Correlation Between Life Time and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Life Time and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Life Time and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Summit Materials.
Diversification Opportunities for Life Time and Summit Materials
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Life and Summit is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Life Time i.e., Life Time and Summit Materials go up and down completely randomly.
Pair Corralation between Life Time and Summit Materials
Considering the 90-day investment horizon Life Time Group is expected to generate 1.36 times more return on investment than Summit Materials. However, Life Time is 1.36 times more volatile than Summit Materials. It trades about 0.06 of its potential returns per unit of risk. Summit Materials is currently generating about 0.07 per unit of risk. If you would invest 1,279 in Life Time Group on August 27, 2024 and sell it today you would earn a total of 1,176 from holding Life Time Group or generate 91.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Summit Materials
Performance |
| Timeline |
| Life Time Group |
| Summit Materials |
Life Time and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Summit Materials
The main advantage of trading using opposite Life Time and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Life Time vs. Bowlero Corp | Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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