Correlation Between Option Care and Lifestance Health
Can any of the company-specific risk be diversified away by investing in both Option Care and Lifestance Health 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 Option Care and Lifestance Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Option Care Health and Lifestance Health Group, you can compare the effects of market volatilities on Option Care and Lifestance Health 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 Option Care with a short position of Lifestance Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Option Care and Lifestance Health.
Diversification Opportunities for Option Care and Lifestance Health
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Option and Lifestance is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Option Care Health and Lifestance Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestance Health and Option Care 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 Option Care Health are associated (or correlated) with Lifestance Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestance Health has no effect on the direction of Option Care i.e., Option Care and Lifestance Health go up and down completely randomly.
Pair Corralation between Option Care and Lifestance Health
Given the investment horizon of 90 days Option Care Health is expected to under-perform the Lifestance Health. But the stock apears to be less risky and, when comparing its historical volatility, Option Care Health is 1.57 times less risky than Lifestance Health. The stock trades about -0.03 of its potential returns per unit of risk. The Lifestance Health Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 669.00 in Lifestance Health Group on September 3, 2024 and sell it today you would earn a total of 83.00 from holding Lifestance Health Group or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Option Care Health vs. Lifestance Health Group
Performance |
| Timeline |
| Option Care Health |
| Lifestance Health |
Option Care and Lifestance Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Option Care and Lifestance Health
The main advantage of trading using opposite Option Care and Lifestance Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Option Care position performs unexpectedly, Lifestance Health 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 Lifestance Health will offset losses from the drop in Lifestance Health's long position.| Option Care vs. Addus HomeCare | Option Care vs. Acadia Healthcare | Option Care vs. Encompass Health Corp | Option Care vs. Select Medical Holdings |
| Lifestance Health vs. Pennant Group | Lifestance Health vs. Encompass Health Corp | Lifestance Health vs. Enhabit | Lifestance Health vs. Concord Medical Services |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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