Correlation Between Universal Health and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Universal Health 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 Universal Health and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Health Services and Planet Fitness Cl, you can compare the effects of market volatilities on Universal Health 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 Universal Health with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Planet Fitness.
Diversification Opportunities for Universal Health and Planet Fitness
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Planet is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services 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 Universal Health 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 Universal Health Services 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 Universal Health i.e., Universal Health and Planet Fitness go up and down completely randomly.
Pair Corralation between Universal Health and Planet Fitness
Assuming the 90 days trading horizon Universal Health is expected to generate 4.25 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, Universal Health Services is 1.17 times less risky than Planet Fitness. It trades about 0.05 of its potential returns per unit of risk. Planet Fitness Cl is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,340 in Planet Fitness Cl on August 30, 2024 and sell it today you would earn a total of 3,733 from holding Planet Fitness Cl or generate 58.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.8% |
| Values | Daily Returns |
Universal Health Services vs. Planet Fitness Cl
Performance |
| Timeline |
| Universal Health Services |
| Planet Fitness Cl |
Universal Health and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Planet Fitness
The main advantage of trading using opposite Universal Health and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health 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.| Universal Health vs. Tungsten West PLC | Universal Health vs. Argo Group Limited | Universal Health vs. Hardide PLC | Universal Health vs. Versarien PLC |
| Planet Fitness vs. Tungsten West PLC | Planet Fitness vs. Argo Group Limited | Planet Fitness vs. Hardide PLC | Planet Fitness vs. Versarien 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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