Correlation Between Life Time and World Kinect
Can any of the company-specific risk be diversified away by investing in both Life Time and World Kinect 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 World Kinect 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 World Kinect, you can compare the effects of market volatilities on Life Time and World Kinect 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 World Kinect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and World Kinect.
Diversification Opportunities for Life Time and World Kinect
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Life and World is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and World Kinect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Kinect 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 World Kinect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Kinect has no effect on the direction of Life Time i.e., Life Time and World Kinect go up and down completely randomly.
Pair Corralation between Life Time and World Kinect
Considering the 90-day investment horizon Life Time Group is expected to generate 1.05 times more return on investment than World Kinect. However, Life Time is 1.05 times more volatile than World Kinect. It trades about 0.13 of its potential returns per unit of risk. World Kinect is currently generating about 0.05 per unit of risk. If you would invest 1,741 in Life Time Group on September 3, 2024 and sell it today you would earn a total of 655.00 from holding Life Time Group or generate 37.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. World Kinect
Performance |
| Timeline |
| Life Time Group |
| World Kinect |
Life Time and World Kinect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and World Kinect
The main advantage of trading using opposite Life Time and World Kinect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, World Kinect 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 World Kinect will offset losses from the drop in World Kinect's long position.| Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Mattel Inc | Life Time vs. OneSpaWorld Holdings |
| World Kinect vs. Nasdaq Inc | World Kinect vs. Stepstone Group | World Kinect vs. Sabra Healthcare REIT | World Kinect vs. Artisan Partners Asset |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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