Correlation Between CF Industries and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both CF Industries 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 CF Industries and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Industries Holdings and Planet Fitness, you can compare the effects of market volatilities on CF Industries 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 CF Industries with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Planet Fitness.
Diversification Opportunities for CF Industries and Planet Fitness
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CF Industries and Planet is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and CF Industries 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 CF Industries Holdings 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 CF Industries i.e., CF Industries and Planet Fitness go up and down completely randomly.
Pair Corralation between CF Industries and Planet Fitness
Allowing for the 90-day total investment horizon CF Industries is expected to generate 3.43 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, CF Industries Holdings is 1.12 times less risky than Planet Fitness. It trades about 0.01 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,105 in Planet Fitness on November 19, 2024 and sell it today you would earn a total of 1,994 from holding Planet Fitness or generate 24.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Industries Holdings vs. Planet Fitness
Performance |
| Timeline |
| CF Industries Holdings |
| Planet Fitness |
CF Industries and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Planet Fitness
The main advantage of trading using opposite CF Industries and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries 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.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| Planet Fitness vs. Life Time Group | Planet Fitness vs. JAKKS Pacific | Planet Fitness vs. Six Flags Entertainment | Planet Fitness vs. Johnson Outdoors |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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