Correlation Between Charter Communications and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Planet Fitness 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 Charter Communications and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications Cl and Planet Fitness Cl, you can compare the effects of market volatilities on Charter Communications and Planet Fitness 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 Charter Communications with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Planet Fitness.
Diversification Opportunities for Charter Communications and Planet Fitness
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charter and Planet is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Planet Fitness Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness Cl and Charter Communications 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 Charter Communications Cl are associated (or correlated) with Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness Cl has no effect on the direction of Charter Communications i.e., Charter Communications and Planet Fitness go up and down completely randomly.
Pair Corralation between Charter Communications and Planet Fitness
Assuming the 90 days trading horizon Charter Communications is expected to generate 1.59 times less return on investment than Planet Fitness. In addition to that, Charter Communications is 1.05 times more volatile than Planet Fitness Cl. It trades about 0.08 of its total potential returns per unit of risk. Planet Fitness Cl is currently generating about 0.14 per unit of volatility. If you would invest 8,358 in Planet Fitness Cl on September 20, 2024 and sell it today you would earn a total of 1,743 from holding Planet Fitness Cl or generate 20.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.88% |
| Values | Daily Returns |
Charter Communications Cl vs. Planet Fitness Cl
Performance |
| Timeline |
| Charter Communications |
| Planet Fitness Cl |
Charter Communications and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Planet Fitness
The main advantage of trading using opposite Charter Communications and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Planet Fitness 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 Planet Fitness will offset losses from the drop in Planet Fitness' long position.| Charter Communications vs. Dolly Varden Silver | Charter Communications vs. Anglesey Mining | Charter Communications vs. Blackrock World Mining | Charter Communications vs. Silvercorp Metals |
| Planet Fitness vs. Charter Communications Cl | Planet Fitness vs. Universal Display Corp | Planet Fitness vs. Metals Exploration Plc | Planet Fitness vs. Aeorema Communications Plc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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