Correlation Between Hasbro and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Hasbro 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 Hasbro and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hasbro Inc and Planet Fitness, you can compare the effects of market volatilities on Hasbro 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 Hasbro with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and Planet Fitness.
Diversification Opportunities for Hasbro and Planet Fitness
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hasbro and Planet is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Hasbro 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 Hasbro Inc 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 Hasbro i.e., Hasbro and Planet Fitness go up and down completely randomly.
Pair Corralation between Hasbro and Planet Fitness
Considering the 90-day investment horizon Hasbro Inc is expected to under-perform the Planet Fitness. But the stock apears to be less risky and, when comparing its historical volatility, Hasbro Inc is 1.77 times less risky than Planet Fitness. The stock trades about -0.08 of its potential returns per unit of risk. The Planet Fitness is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 7,850 in Planet Fitness on August 31, 2024 and sell it today you would earn a total of 2,252 from holding Planet Fitness or generate 28.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hasbro Inc vs. Planet Fitness
Performance |
| Timeline |
| Hasbro Inc |
| Planet Fitness |
Hasbro and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hasbro and Planet Fitness
The main advantage of trading using opposite Hasbro and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro 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.The idea behind Hasbro Inc and Planet Fitness pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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