Correlation Between Planet Fitness and Toyota
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Toyota 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 Toyota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Toyota Motor, you can compare the effects of market volatilities on Planet Fitness and Toyota 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 Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Toyota.
Diversification Opportunities for Planet Fitness and Toyota
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Planet and Toyota is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Toyota Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor 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 Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor has no effect on the direction of Planet Fitness i.e., Planet Fitness and Toyota go up and down completely randomly.
Pair Corralation between Planet Fitness and Toyota
Assuming the 90 days trading horizon Planet Fitness is expected to generate 11.59 times more return on investment than Toyota. However, Planet Fitness is 11.59 times more volatile than Toyota Motor. It trades about 0.22 of its potential returns per unit of risk. Toyota Motor is currently generating about 0.18 per unit of risk. If you would invest 3,984 in Planet Fitness on September 12, 2024 and sell it today you would earn a total of 3,608 from holding Planet Fitness or generate 90.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Fitness vs. Toyota Motor
Performance |
| Timeline |
| Planet Fitness |
| Toyota Motor |
Planet Fitness and Toyota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Toyota
The main advantage of trading using opposite Planet Fitness and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Toyota 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 Toyota will offset losses from the drop in Toyota's long position.| Planet Fitness vs. Fundo Investimento Imobiliario | Planet Fitness vs. LESTE FDO INV | Planet Fitness vs. Fras le SA | Planet Fitness vs. Western Digital |
| Toyota vs. Unity Software | Toyota vs. Metalrgica Riosulense SA | Toyota vs. GP Investments | Toyota vs. Charter Communications |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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