Correlation Between Summit Hotel and Planet Fitness

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Can any of the company-specific risk be diversified away by investing in both Summit Hotel 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 Summit Hotel and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Hotel Properties and Planet Fitness, you can compare the effects of market volatilities on Summit Hotel 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 Summit Hotel with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Planet Fitness.

Diversification Opportunities for Summit Hotel and Planet Fitness

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Summit and Planet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Summit Hotel 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 Summit Hotel Properties 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 Summit Hotel i.e., Summit Hotel and Planet Fitness go up and down completely randomly.

Pair Corralation between Summit Hotel and Planet Fitness

Considering the 90-day investment horizon Summit Hotel Properties is expected to under-perform the Planet Fitness. But the stock apears to be less risky and, when comparing its historical volatility, Summit Hotel Properties is 1.49 times less risky than Planet Fitness. The stock trades about -0.04 of its potential returns per unit of risk. The Planet Fitness is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  10,024  in Planet Fitness on November 4, 2024 and sell it today you would earn a total of  792.00  from holding Planet Fitness or generate 7.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Summit Hotel Properties  vs.  Planet Fitness

 Performance 
       Timeline  
Summit Hotel Properties 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Summit Hotel may actually be approaching a critical reversion point that can send shares even higher in March 2025.
Planet Fitness 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Planet Fitness unveiled solid returns over the last few months and may actually be approaching a breakup point.

Summit Hotel and Planet Fitness Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Summit Hotel and Planet Fitness

The main advantage of trading using opposite Summit Hotel and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel 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 Summit Hotel Properties 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.
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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 CEOs Directory module to screen CEOs from public companies around the world.

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