Correlation Between Life Time and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Life Time 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 Life Time and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Time Group and Planet Fitness, you can compare the effects of market volatilities on Life Time 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 Life Time with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Planet Fitness.
Diversification Opportunities for Life Time and Planet Fitness
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Life and Planet is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Life Time 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 Life Time Group 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 Life Time i.e., Life Time and Planet Fitness go up and down completely randomly.
Pair Corralation between Life Time and Planet Fitness
Considering the 90-day investment horizon Life Time Group is expected to generate 1.28 times more return on investment than Planet Fitness. However, Life Time is 1.28 times more volatile than Planet Fitness. It trades about 0.06 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.03 per unit of risk. If you would invest 1,311 in Life Time Group on August 23, 2024 and sell it today you would earn a total of 1,127 from holding Life Time Group or generate 85.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Planet Fitness
Performance |
| Timeline |
| Life Time Group |
| Planet Fitness |
Life Time and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Planet Fitness
The main advantage of trading using opposite Life Time and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time 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.| Life Time vs. Bowlero Corp | Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness |
| 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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