Correlation Between Planet Fitness and European Metals
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on Planet Fitness and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and European Metals.
Diversification Opportunities for Planet Fitness and European Metals
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Planet and European is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Planet Fitness i.e., Planet Fitness and European Metals go up and down completely randomly.
Pair Corralation between Planet Fitness and European Metals
Assuming the 90 days trading horizon Planet Fitness Cl is expected to generate 0.49 times more return on investment than European Metals. However, Planet Fitness Cl is 2.06 times less risky than European Metals. It trades about 0.14 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.23 per unit of risk. If you would invest 9,745 in Planet Fitness Cl on September 20, 2024 and sell it today you would earn a total of 356.00 from holding Planet Fitness Cl or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Planet Fitness Cl vs. European Metals Holdings
Performance |
| Timeline |
| Planet Fitness Cl |
| European Metals Holdings |
Planet Fitness and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and European Metals
The main advantage of trading using opposite Planet Fitness and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Planet Fitness vs. Charter Communications Cl | Planet Fitness vs. Universal Display Corp | Planet Fitness vs. Metals Exploration Plc | Planet Fitness vs. Aeorema Communications Plc |
| European Metals vs. Waste Management | European Metals vs. Naturhouse Health SA | European Metals vs. Cardinal Health | European Metals vs. Planet Fitness Cl |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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