Correlation Between Planet Fitness and Eaton Plc
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Eaton Plc 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 Planet Fitness and Eaton Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Eaton plc, you can compare the effects of market volatilities on Planet Fitness and Eaton Plc 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 Planet Fitness with a short position of Eaton Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Eaton Plc.
Diversification Opportunities for Planet Fitness and Eaton Plc
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Planet and Eaton is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Eaton plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton plc and Planet Fitness 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 Planet Fitness are associated (or correlated) with Eaton Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton plc has no effect on the direction of Planet Fitness i.e., Planet Fitness and Eaton Plc go up and down completely randomly.
Pair Corralation between Planet Fitness and Eaton Plc
Assuming the 90 days trading horizon Planet Fitness is expected to under-perform the Eaton Plc. But the stock apears to be less risky and, when comparing its historical volatility, Planet Fitness is 1.13 times less risky than Eaton Plc. The stock trades about -0.02 of its potential returns per unit of risk. The Eaton plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5,777 in Eaton plc on September 2, 2024 and sell it today you would earn a total of 10,323 from holding Eaton plc or generate 178.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Fitness vs. Eaton plc
Performance |
| Timeline |
| Planet Fitness |
| Eaton plc |
Planet Fitness and Eaton Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Eaton Plc
The main advantage of trading using opposite Planet Fitness and Eaton Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Eaton Plc 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 Eaton Plc will offset losses from the drop in Eaton Plc's long position.| Planet Fitness vs. Cambuci SA | Planet Fitness vs. Bicicletas Monark SA | Planet Fitness vs. Fras le SA | Planet Fitness vs. Western Digital |
| Eaton Plc vs. Planet Fitness | Eaton Plc vs. Deutsche Bank Aktiengesellschaft | Eaton Plc vs. CVS Health | Eaton Plc vs. Bread Financial Holdings |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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