Correlation Between Planet Fitness and Warner Music
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Warner Music 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 Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Warner Music Group, you can compare the effects of market volatilities on Planet Fitness and Warner Music 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 Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Warner Music.
Diversification Opportunities for Planet Fitness and Warner Music
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Planet and Warner is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group 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 Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of Planet Fitness i.e., Planet Fitness and Warner Music go up and down completely randomly.
Pair Corralation between Planet Fitness and Warner Music
Assuming the 90 days trading horizon Planet Fitness is not expected to generate positive returns. However, Planet Fitness is 1.53 times less risky than Warner Music. It waists most of its returns potential to compensate for thr risk taken. Warner Music is generating about 0.08 per unit of risk. If you would invest 2,947 in Warner Music Group on August 31, 2024 and sell it today you would earn a total of 1,891 from holding Warner Music Group or generate 64.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 96.77% |
| Values | Daily Returns |
Planet Fitness vs. Warner Music Group
Performance |
| Timeline |
| Planet Fitness |
| Warner Music Group |
Planet Fitness and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Warner Music
The main advantage of trading using opposite Planet Fitness and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Warner Music 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 Warner Music will offset losses from the drop in Warner Music'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 |
| Warner Music vs. Intelbras SA | Warner Music vs. Neogrid Participaes SA | Warner Music vs. Mliuz SA | Warner Music vs. Locaweb Servios de |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |