Correlation Between APPLIED MATERIALS and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS 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 APPLIED MATERIALS and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Planet Fitness, you can compare the effects of market volatilities on APPLIED MATERIALS 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 APPLIED MATERIALS with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Planet Fitness.
Diversification Opportunities for APPLIED MATERIALS and Planet Fitness
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and Planet is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS i.e., APPLIED MATERIALS and Planet Fitness go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Planet Fitness
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.67 times more return on investment than Planet Fitness. However, APPLIED MATERIALS is 1.67 times more volatile than Planet Fitness. It trades about 0.27 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.19 per unit of risk. If you would invest 15,976 in APPLIED MATERIALS on October 26, 2024 and sell it today you would earn a total of 2,218 from holding APPLIED MATERIALS or generate 13.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. Planet Fitness
Performance |
| Timeline |
| APPLIED MATERIALS |
| Planet Fitness |
APPLIED MATERIALS and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Planet Fitness
The main advantage of trading using opposite APPLIED MATERIALS and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS 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.| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc |
| Planet Fitness vs. PULSION Medical Systems | Planet Fitness vs. SCANDMEDICAL SOLDK 040 | Planet Fitness vs. Tradegate AG Wertpapierhandelsbank | Planet Fitness vs. CANON MARKETING JP |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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