Correlation Between Planet Fitness and Legal General
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Legal General 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 Legal General 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 Legal General Group, you can compare the effects of market volatilities on Planet Fitness and Legal General 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 Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Legal General.
Diversification Opportunities for Planet Fitness and Legal General
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Planet and Legal is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of Planet Fitness i.e., Planet Fitness and Legal General go up and down completely randomly.
Pair Corralation between Planet Fitness and Legal General
Assuming the 90 days trading horizon Planet Fitness Cl is expected to generate 3.18 times more return on investment than Legal General. However, Planet Fitness is 3.18 times more volatile than Legal General Group. It trades about 0.33 of its potential returns per unit of risk. Legal General Group is currently generating about 0.01 per unit of risk. If you would invest 7,948 in Planet Fitness Cl on August 31, 2024 and sell it today you would earn a total of 2,032 from holding Planet Fitness Cl or generate 25.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Fitness Cl vs. Legal General Group
Performance |
| Timeline |
| Planet Fitness Cl |
| Legal General Group |
Planet Fitness and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Legal General
The main advantage of trading using opposite Planet Fitness and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| Planet Fitness vs. Neometals | Planet Fitness vs. Coor Service Management | Planet Fitness vs. Aeorema Communications Plc | Planet Fitness vs. JLEN Environmental Assets |
| Legal General vs. Ebro Foods | Legal General vs. Gaztransport et Technigaz | Legal General vs. Cornish Metals | Legal General vs. Coor Service Management |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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