Correlation Between Volkswagen and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG Non Vtg and Planet Fitness Cl, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Planet Fitness.
Diversification Opportunities for Volkswagen and Planet Fitness
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Volkswagen and Planet is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Non Vtg 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 Volkswagen 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 Volkswagen AG Non Vtg 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 Volkswagen i.e., Volkswagen and Planet Fitness go up and down completely randomly.
Pair Corralation between Volkswagen and Planet Fitness
Assuming the 90 days trading horizon Volkswagen AG Non Vtg is expected to generate 1.2 times more return on investment than Planet Fitness. However, Volkswagen is 1.2 times more volatile than Planet Fitness Cl. It trades about 0.14 of its potential returns per unit of risk. Planet Fitness Cl is currently generating about -0.06 per unit of risk. If you would invest 8,560 in Volkswagen AG Non Vtg on October 11, 2024 and sell it today you would earn a total of 349.00 from holding Volkswagen AG Non Vtg or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG Non Vtg vs. Planet Fitness Cl
Performance |
| Timeline |
| Volkswagen AG Non |
| Planet Fitness Cl |
Volkswagen and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Planet Fitness
The main advantage of trading using opposite Volkswagen and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. British American Tobacco | Volkswagen vs. Jupiter Fund Management | Volkswagen vs. Odfjell Drilling | Volkswagen vs. Software Circle plc |
| Planet Fitness vs. GlobalData PLC | Planet Fitness vs. Zoom Video Communications | Planet Fitness vs. Charter Communications Cl | Planet Fitness vs. Catalyst Media Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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