Correlation Between American Outdoor and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both American Outdoor 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 American Outdoor and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Outdoor Brands and Planet Fitness, you can compare the effects of market volatilities on American Outdoor 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 American Outdoor with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Outdoor and Planet Fitness.
Diversification Opportunities for American Outdoor and Planet Fitness
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Planet is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding American Outdoor Brands and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and American Outdoor 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 American Outdoor Brands 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 American Outdoor i.e., American Outdoor and Planet Fitness go up and down completely randomly.
Pair Corralation between American Outdoor and Planet Fitness
Given the investment horizon of 90 days American Outdoor is expected to generate 6.57 times less return on investment than Planet Fitness. In addition to that, American Outdoor is 1.14 times more volatile than Planet Fitness. It trades about 0.01 of its total potential returns per unit of risk. Planet Fitness is currently generating about 0.04 per unit of volatility. If you would invest 7,557 in Planet Fitness on August 27, 2024 and sell it today you would earn a total of 2,596 from holding Planet Fitness or generate 34.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Outdoor Brands vs. Planet Fitness
Performance |
| Timeline |
| American Outdoor Brands |
| Planet Fitness |
American Outdoor and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Outdoor and Planet Fitness
The main advantage of trading using opposite American Outdoor and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Outdoor 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.| American Outdoor vs. Clarus Corp | American Outdoor vs. Escalade Incorporated | American Outdoor vs. Johnson Outdoors | American Outdoor vs. JAKKS Pacific |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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