Correlation Between National Beverage and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Planet Fitness, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Planet Fitness.
Diversification Opportunities for National Beverage and Planet Fitness
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Planet is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Planet Fitness go up and down completely randomly.
Pair Corralation between National Beverage and Planet Fitness
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.66 times more return on investment than Planet Fitness. However, National Beverage Corp is 1.5 times less risky than Planet Fitness. It trades about -0.16 of its potential returns per unit of risk. Planet Fitness is currently generating about -0.31 per unit of risk. If you would invest 4,218 in National Beverage Corp on December 1, 2024 and sell it today you would lose (235.00) from holding National Beverage Corp or give up 5.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Planet Fitness
Performance |
| Timeline |
| National Beverage Corp |
| Planet Fitness |
National Beverage and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Planet Fitness
The main advantage of trading using opposite National Beverage and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.| National Beverage vs. Celsius Holdings | National Beverage vs. Monster Beverage Corp | National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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