Correlation Between Ambev SA and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Ambev SA 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 Ambev SA and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambev SA ADR and Planet Fitness, you can compare the effects of market volatilities on Ambev SA 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 Ambev SA with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Planet Fitness.
Diversification Opportunities for Ambev SA and Planet Fitness
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ambev and Planet is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Ambev SA 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 Ambev SA ADR 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 has no effect on the direction of Ambev SA i.e., Ambev SA and Planet Fitness go up and down completely randomly.
Pair Corralation between Ambev SA and Planet Fitness
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Planet Fitness. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.37 times less risky than Planet Fitness. The stock trades about -0.01 of its potential returns per unit of risk. The Planet Fitness is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,827 in Planet Fitness on September 12, 2024 and sell it today you would earn a total of 2,395 from holding Planet Fitness or generate 30.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Planet Fitness
Performance |
| Timeline |
| Ambev SA ADR |
| Planet Fitness |
Ambev SA and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Planet Fitness
The main advantage of trading using opposite Ambev SA and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA 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.| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Molson Coors Beverage |
| Planet Fitness vs. Life Time Group | Planet Fitness vs. Bowlero Corp | Planet Fitness vs. JAKKS Pacific | Planet Fitness vs. Six Flags Entertainment |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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