Correlation Between Ultra Clean and Life Time
Can any of the company-specific risk be diversified away by investing in both Ultra Clean 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 Ultra Clean and Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Clean Holdings and Life Time Group, you can compare the effects of market volatilities on Ultra Clean 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 Ultra Clean with a short position of Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Life Time.
Diversification Opportunities for Ultra Clean and Life Time
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ultra and Life is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings 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 Ultra Clean 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 Ultra Clean Holdings 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 Ultra Clean i.e., Ultra Clean and Life Time go up and down completely randomly.
Pair Corralation between Ultra Clean and Life Time
Given the investment horizon of 90 days Ultra Clean Holdings is expected to generate 1.93 times more return on investment than Life Time. However, Ultra Clean is 1.93 times more volatile than Life Time Group. It trades about 0.03 of its potential returns per unit of risk. Life Time Group is currently generating about -0.16 per unit of risk. If you would invest 3,660 in Ultra Clean Holdings on September 12, 2024 and sell it today you would earn a total of 44.00 from holding Ultra Clean Holdings or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Clean Holdings vs. Life Time Group
Performance |
| Timeline |
| Ultra Clean Holdings |
| Life Time Group |
Ultra Clean and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Life Time
The main advantage of trading using opposite Ultra Clean and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean 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.| Ultra Clean vs. Teradyne | Ultra Clean vs. Onto Innovation | Ultra Clean vs. Cohu Inc | Ultra Clean vs. Entegris |
| Life Time vs. Planet Fitness | Life Time vs. Bowlero Corp | Life Time vs. JAKKS Pacific | Life Time vs. Acushnet Holdings Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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