Correlation Between Sound Point and Life Time
Can any of the company-specific risk be diversified away by investing in both Sound Point and Life Time 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 Sound Point and Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Point Meridian and Life Time Group, you can compare the effects of market volatilities on Sound Point and Life Time 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 Sound Point with a short position of Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Point and Life Time.
Diversification Opportunities for Sound Point and Life Time
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sound and Life is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sound Point Meridian and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group and Sound Point 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 Sound Point Meridian are associated (or correlated) with Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Sound Point i.e., Sound Point and Life Time go up and down completely randomly.
Pair Corralation between Sound Point and Life Time
Given the investment horizon of 90 days Sound Point Meridian is expected to generate 1.16 times more return on investment than Life Time. However, Sound Point is 1.16 times more volatile than Life Time Group. It trades about 0.22 of its potential returns per unit of risk. Life Time Group is currently generating about 0.18 per unit of risk. If you would invest 1,855 in Sound Point Meridian on September 4, 2024 and sell it today you would earn a total of 166.00 from holding Sound Point Meridian or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sound Point Meridian vs. Life Time Group
Performance |
| Timeline |
| Sound Point Meridian |
| Life Time Group |
Sound Point and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Point and Life Time
The main advantage of trading using opposite Sound Point and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Point position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time's long position.| Sound Point vs. Life Time Group | Sound Point vs. Playa Hotels Resorts | Sound Point vs. Palomar Holdings | Sound Point vs. The Hanover Insurance |
| Life Time vs. Hyatt Hotels | Life Time vs. Smart Share Global | Life Time vs. Sweetgreen | Life Time vs. Wyndham Hotels Resorts |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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