Correlation Between Life Time and United Parks
Can any of the company-specific risk be diversified away by investing in both Life Time and United Parks 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 United Parks 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 United Parks Resorts, you can compare the effects of market volatilities on Life Time and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and United Parks.
Diversification Opportunities for Life Time and United Parks
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Life and United is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Life Time i.e., Life Time and United Parks go up and down completely randomly.
Pair Corralation between Life Time and United Parks
Considering the 90-day investment horizon Life Time Group is expected to generate 0.79 times more return on investment than United Parks. However, Life Time Group is 1.27 times less risky than United Parks. It trades about 0.12 of its potential returns per unit of risk. United Parks Resorts is currently generating about 0.08 per unit of risk. If you would invest 2,482 in Life Time Group on July 23, 2024 and sell it today you would earn a total of 98.00 from holding Life Time Group or generate 3.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Life Time Group vs. United Parks Resorts
Performance |
Timeline |
Life Time Group |
United Parks Resorts |
Life Time and United Parks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Life Time and United Parks
The main advantage of trading using opposite Life Time and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.Life Time vs. Bowlero Corp | Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness |
United Parks vs. Century Communities | United Parks vs. Highway Holdings Limited | United Parks vs. Vita Coco | United Parks vs. Compania Cervecerias Unidas |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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