Correlation Between Air Transport and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and Planet Fitness, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Planet Fitness.
Diversification Opportunities for Air Transport and Planet Fitness
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Planet is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and Planet Fitness go up and down completely randomly.
Pair Corralation between Air Transport and Planet Fitness
Given the investment horizon of 90 days Air Transport is expected to generate 8.48 times less return on investment than Planet Fitness. In addition to that, Air Transport is 1.48 times more volatile than Planet Fitness. It trades about 0.0 of its total potential returns per unit of risk. Planet Fitness is currently generating about 0.03 per unit of volatility. If you would invest 7,800 in Planet Fitness on September 4, 2024 and sell it today you would earn a total of 2,158 from holding Planet Fitness or generate 27.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Planet Fitness
Performance |
| Timeline |
| Air Transport Services |
| Planet Fitness |
Air Transport and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Planet Fitness
The main advantage of trading using opposite Air Transport and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
| Planet Fitness vs. Hyatt Hotels | Planet Fitness vs. Smart Share Global | Planet Fitness vs. Sweetgreen | Planet Fitness vs. Wyndham Hotels Resorts |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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