Correlation Between Planet Fitness and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on Planet Fitness and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Spirent Communications.
Diversification Opportunities for Planet Fitness and Spirent Communications
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Planet and Spirent is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Planet Fitness i.e., Planet Fitness and Spirent Communications go up and down completely randomly.
Pair Corralation between Planet Fitness and Spirent Communications
Assuming the 90 days trading horizon Planet Fitness Cl is expected to generate 0.79 times more return on investment than Spirent Communications. However, Planet Fitness Cl is 1.26 times less risky than Spirent Communications. It trades about -0.08 of its potential returns per unit of risk. Spirent Communications plc is currently generating about -0.14 per unit of risk. If you would invest 9,836 in Planet Fitness Cl on January 17, 2025 and sell it today you would lose (340.00) from holding Planet Fitness Cl or give up 3.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Fitness Cl vs. Spirent Communications plc
Performance |
| Timeline |
| Planet Fitness Cl |
| Spirent Communications |
Planet Fitness and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Spirent Communications
The main advantage of trading using opposite Planet Fitness and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Planet Fitness vs. Gamma Communications PLC | Planet Fitness vs. Fonix Mobile plc | Planet Fitness vs. Ion Beam Applications | Planet Fitness vs. Teradata Corp |
| Spirent Communications vs. Hardide PLC | Spirent Communications vs. SANTANDER UK 10 | Spirent Communications vs. Coor Service Management | Spirent Communications vs. Surgical Science Sweden |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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