Correlation Between Fevertree Drinks and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Planet Fitness Cl, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Planet Fitness.
Diversification Opportunities for Fevertree Drinks and Planet Fitness
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fevertree and Planet is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Planet Fitness Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness Cl and Fevertree Drinks 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 Fevertree Drinks Plc 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 Cl has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Planet Fitness go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Planet Fitness
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the Planet Fitness. But the stock apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 1.12 times less risky than Planet Fitness. The stock trades about -0.46 of its potential returns per unit of risk. The Planet Fitness Cl is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 10,165 in Planet Fitness Cl on October 13, 2024 and sell it today you would earn a total of 3.00 from holding Planet Fitness Cl or generate 0.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Planet Fitness Cl
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Planet Fitness Cl |
Fevertree Drinks and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Planet Fitness
The main advantage of trading using opposite Fevertree Drinks and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Bell Food Group | Fevertree Drinks vs. Beazer Homes USA | Fevertree Drinks vs. Hilton Food Group | Fevertree Drinks vs. United Airlines Holdings |
| Planet Fitness vs. Coeur Mining | Planet Fitness vs. Spirent Communications plc | Planet Fitness vs. Thor Mining PLC | Planet Fitness vs. Batm Advanced Communications |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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