Correlation Between Six Flags and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Six Flags 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 Six Flags and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Six Flags Entertainment and Planet Fitness, you can compare the effects of market volatilities on Six Flags 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 Six Flags with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Six Flags and Planet Fitness.
Diversification Opportunities for Six Flags and Planet Fitness
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Six and Planet is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Six Flags 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 Six Flags Entertainment 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 Six Flags i.e., Six Flags and Planet Fitness go up and down completely randomly.
Pair Corralation between Six Flags and Planet Fitness
Considering the 90-day investment horizon Six Flags is expected to generate 1.44 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, Six Flags Entertainment is 1.16 times less risky than Planet Fitness. It trades about 0.03 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,557 in Planet Fitness on August 27, 2024 and sell it today you would earn a total of 2,596 from holding Planet Fitness or generate 34.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Six Flags Entertainment vs. Planet Fitness
Performance |
| Timeline |
| Six Flags Entertainment |
| Planet Fitness |
Six Flags and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Six Flags and Planet Fitness
The main advantage of trading using opposite Six Flags and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Six Flags 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.| Six Flags vs. Planet Fitness | Six Flags vs. Madison Square Garden | Six Flags vs. Mattel Inc | Six Flags vs. Johnson Outdoors |
| Planet Fitness vs. Life Time Group | Planet Fitness vs. Bowlero Corp | Planet Fitness vs. JAKKS Pacific | Planet Fitness vs. Six Flags Entertainment |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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