Correlation Between Planet Fitness and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Yum Brands 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 Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Yum Brands, you can compare the effects of market volatilities on Planet Fitness and Yum Brands 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 Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Yum Brands.
Diversification Opportunities for Planet Fitness and Yum Brands
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Planet and Yum is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands 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 Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of Planet Fitness i.e., Planet Fitness and Yum Brands go up and down completely randomly.
Pair Corralation between Planet Fitness and Yum Brands
Assuming the 90 days horizon Planet Fitness is expected to generate 1.3 times more return on investment than Yum Brands. However, Planet Fitness is 1.3 times more volatile than Yum Brands. It trades about 0.01 of its potential returns per unit of risk. Yum Brands is currently generating about -0.24 per unit of risk. If you would invest 9,500 in Planet Fitness on October 11, 2024 and sell it today you would earn a total of 0.00 from holding Planet Fitness or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Fitness vs. Yum Brands
Performance |
| Timeline |
| Planet Fitness |
| Yum Brands |
Planet Fitness and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Yum Brands
The main advantage of trading using opposite Planet Fitness and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Yum Brands 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 Yum Brands will offset losses from the drop in Yum Brands' long position.| Planet Fitness vs. Compagnie Plastic Omnium | Planet Fitness vs. SANOK RUBBER ZY | Planet Fitness vs. VULCAN MATERIALS | Planet Fitness vs. Lifeway Foods |
| Yum Brands vs. OPKO HEALTH | Yum Brands vs. Thai Beverage Public | Yum Brands vs. Planet Fitness | Yum Brands vs. MOLSON RS BEVERAGE |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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