Correlation Between Microsoft and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Planet Fitness Cl, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Planet Fitness.
Diversification Opportunities for Microsoft and Planet Fitness
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Planet is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Planet Fitness Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness Cl and Microsoft 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 Microsoft 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 Cl has no effect on the direction of Microsoft i.e., Microsoft and Planet Fitness go up and down completely randomly.
Pair Corralation between Microsoft and Planet Fitness
Given the investment horizon of 90 days Microsoft is expected to under-perform the Planet Fitness. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.84 times less risky than Planet Fitness. The stock trades about -0.04 of its potential returns per unit of risk. The Planet Fitness Cl is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 7,948 in Planet Fitness Cl on August 31, 2024 and sell it today you would earn a total of 2,125 from holding Planet Fitness Cl or generate 26.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Planet Fitness Cl
Performance |
| Timeline |
| Microsoft |
| Planet Fitness Cl |
Microsoft and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Planet Fitness
The main advantage of trading using opposite Microsoft and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Planet Fitness vs. Neometals | Planet Fitness vs. Coor Service Management | Planet Fitness vs. Aeorema Communications Plc | Planet Fitness vs. JLEN Environmental Assets |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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