Correlation Between Inter Parfums and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Inter Parfums 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 Inter Parfums and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Parfums and Planet Fitness, you can compare the effects of market volatilities on Inter Parfums 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 Inter Parfums with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Parfums and Planet Fitness.
Diversification Opportunities for Inter Parfums and Planet Fitness
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inter and Planet is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Inter Parfums 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 Inter Parfums 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 Inter Parfums i.e., Inter Parfums and Planet Fitness go up and down completely randomly.
Pair Corralation between Inter Parfums and Planet Fitness
Given the investment horizon of 90 days Inter Parfums is expected to generate 1.86 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, Inter Parfums is 1.51 times less risky than Planet Fitness. It trades about 0.34 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 7,852 in Planet Fitness on September 1, 2024 and sell it today you would earn a total of 2,103 from holding Planet Fitness or generate 26.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inter Parfums vs. Planet Fitness
Performance |
| Timeline |
| Inter Parfums |
| Planet Fitness |
Inter Parfums and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Parfums and Planet Fitness
The main advantage of trading using opposite Inter Parfums and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Parfums 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.| Inter Parfums vs. Seneca Foods Corp | Inter Parfums vs. Central Garden Pet | Inter Parfums vs. Central Garden Pet | Inter Parfums vs. Lifeway Foods |
| Planet Fitness vs. The Wendys Co | Planet Fitness vs. Shake Shack | Planet Fitness vs. Papa Johns International | Planet Fitness vs. Darden Restaurants |
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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