Correlation Between Triton International and Life Time
Can any of the company-specific risk be diversified away by investing in both Triton International 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 Triton International and Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triton International Limited and Life Time Group, you can compare the effects of market volatilities on Triton International 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 Triton International with a short position of Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triton International and Life Time.
Diversification Opportunities for Triton International and Life Time
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Triton and Life is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited 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 Triton International 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 Triton International Limited 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 Triton International i.e., Triton International and Life Time go up and down completely randomly.
Pair Corralation between Triton International and Life Time
Assuming the 90 days trading horizon Triton International is expected to generate 5.25 times less return on investment than Life Time. But when comparing it to its historical volatility, Triton International Limited is 3.14 times less risky than Life Time. It trades about 0.06 of its potential returns per unit of risk. Life Time Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,443 in Life Time Group on September 2, 2024 and sell it today you would earn a total of 984.00 from holding Life Time Group or generate 68.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triton International Limited vs. Life Time Group
Performance |
| Timeline |
| Triton International |
| Life Time Group |
Triton International and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triton International and Life Time
The main advantage of trading using opposite Triton International and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International 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.The idea behind Triton International Limited and Life Time Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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