Correlation Between Planet Fitness and National Beverage
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and National Beverage 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 National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and National Beverage Corp, you can compare the effects of market volatilities on Planet Fitness and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and National Beverage.
Diversification Opportunities for Planet Fitness and National Beverage
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Planet and National is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Planet Fitness i.e., Planet Fitness and National Beverage go up and down completely randomly.
Pair Corralation between Planet Fitness and National Beverage
Assuming the 90 days horizon Planet Fitness is expected to generate 1.43 times more return on investment than National Beverage. However, Planet Fitness is 1.43 times more volatile than National Beverage Corp. It trades about 0.17 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.03 per unit of risk. If you would invest 9,650 in Planet Fitness on November 1, 2024 and sell it today you would earn a total of 550.00 from holding Planet Fitness or generate 5.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Fitness vs. National Beverage Corp
Performance |
| Timeline |
| Planet Fitness |
| National Beverage Corp |
Planet Fitness and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and National Beverage
The main advantage of trading using opposite Planet Fitness and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Planet Fitness vs. Sunny Optical Technology | Planet Fitness vs. Wayside Technology Group | Planet Fitness vs. Micron Technology | Planet Fitness vs. Vishay Intertechnology |
| National Beverage vs. Planet Fitness | National Beverage vs. American Eagle Outfitters | National Beverage vs. Eidesvik Offshore ASA | National Beverage vs. WT OFFSHORE |
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 CEOs Directory module to screen CEOs from public companies around the world.
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