Correlation Between Life Time and Hasbro
Can any of the company-specific risk be diversified away by investing in both Life Time and Hasbro 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 Hasbro 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 Hasbro Inc, you can compare the effects of market volatilities on Life Time and Hasbro 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 Hasbro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Hasbro.
Diversification Opportunities for Life Time and Hasbro
Very weak diversification
The 3 months correlation between Life and Hasbro is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro Inc 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 Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Life Time i.e., Life Time and Hasbro go up and down completely randomly.
Pair Corralation between Life Time and Hasbro
Considering the 90-day investment horizon Life Time Group is expected to generate 1.34 times more return on investment than Hasbro. However, Life Time is 1.34 times more volatile than Hasbro Inc. It trades about 0.17 of its potential returns per unit of risk. Hasbro Inc is currently generating about 0.16 per unit of risk. If you would invest 1,248 in Life Time Group on February 23, 2024 and sell it today you would earn a total of 402.00 from holding Life Time Group or generate 32.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Life Time Group vs. Hasbro Inc
Performance |
Timeline |
Life Time Group |
Hasbro Inc |
Life Time and Hasbro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Life Time and Hasbro
The main advantage of trading using opposite Life Time and Hasbro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time position performs unexpectedly, Hasbro 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 Hasbro will offset losses from the drop in Hasbro's long position.Life Time vs. Bowlero Corp | Life Time vs. JAKKS Pacific | Life Time vs. Cedar Fair LP | Life Time vs. Six Flags Entertainment |
Hasbro vs. Vista Outdoor | Hasbro vs. Escalade Incorporated | Hasbro vs. JAKKS Pacific | Hasbro vs. Cedar Fair LP |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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