Recent development1 of wearable sensor technologies have made it possible to capture concurrent data streams for ambient environment and instantaneous physiological stress response at a fine granularity. Characterizing the delay in physiological stress response time to each environment stimulus is as important as capturing the magnitude of the effect. In this paper, we discuss and evaluate a new regularization-based statistical method to determine the ideal lagged effect of five environmental factors - carbon dioxide, temperature, relative humidity, atmospheric pressure and noise levels on instantaneous stress response. Using this method, we infer that the first four environment variables have a cumulative lagged effect, of approximately 60 minutes, on stress response whereas noise level has an instantaneous effect on stress response. The proposed transformations to inputs result in models with better fit and predictive performance. This study not only informs the field of environment-wellbeing research about the cumulative lagged effects of the specified environmental factors, but also proposes a new method for determining optimal feature transformation in similar smart health studies.