Correlation Between Planet Fitness and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Westlake Chemical 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 Planet Fitness and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness Cl and Westlake Chemical Corp, you can compare the effects of market volatilities on Planet Fitness and Westlake Chemical 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 Planet Fitness with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Westlake Chemical.
Diversification Opportunities for Planet Fitness and Westlake Chemical
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Planet and Westlake is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and Westlake Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical Corp and Planet Fitness 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 Planet Fitness Cl are associated (or correlated) with Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical Corp has no effect on the direction of Planet Fitness i.e., Planet Fitness and Westlake Chemical go up and down completely randomly.
Pair Corralation between Planet Fitness and Westlake Chemical
Assuming the 90 days trading horizon Planet Fitness Cl is expected to generate 1.32 times more return on investment than Westlake Chemical. However, Planet Fitness is 1.32 times more volatile than Westlake Chemical Corp. It trades about 0.15 of its potential returns per unit of risk. Westlake Chemical Corp is currently generating about -0.07 per unit of risk. If you would invest 10,193 in Planet Fitness Cl on November 5, 2024 and sell it today you would earn a total of 626.00 from holding Planet Fitness Cl or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Planet Fitness Cl vs. Westlake Chemical Corp
Performance |
| Timeline |
| Planet Fitness Cl |
| Westlake Chemical Corp |
Planet Fitness and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Westlake Chemical
The main advantage of trading using opposite Planet Fitness and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.| Planet Fitness vs. Europa Metals | Planet Fitness vs. Zegona Communications Plc | Planet Fitness vs. Cellnex Telecom SA | Planet Fitness vs. Cairo Communication SpA |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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