Correlation Between Park Aerospace and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Park Aerospace 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 Park Aerospace and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Aerospace Corp and Planet Fitness, you can compare the effects of market volatilities on Park Aerospace 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 Park Aerospace with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Aerospace and Planet Fitness.
Diversification Opportunities for Park Aerospace and Planet Fitness
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Park and Planet is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Park Aerospace Corp and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Park Aerospace 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 Park Aerospace Corp 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 Park Aerospace i.e., Park Aerospace and Planet Fitness go up and down completely randomly.
Pair Corralation between Park Aerospace and Planet Fitness
Assuming the 90 days horizon Park Aerospace is expected to generate 1.79 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, Park Aerospace Corp is 1.03 times less risky than Planet Fitness. It trades about 0.1 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,500 in Planet Fitness on November 3, 2024 and sell it today you would earn a total of 3,800 from holding Planet Fitness or generate 58.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Aerospace Corp vs. Planet Fitness
Performance |
| Timeline |
| Park Aerospace Corp |
| Planet Fitness |
Park Aerospace and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Aerospace and Planet Fitness
The main advantage of trading using opposite Park Aerospace and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Aerospace 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.| Park Aerospace vs. Molson Coors Beverage | Park Aerospace vs. CAREER EDUCATION | Park Aerospace vs. Laureate Education | Park Aerospace vs. DeVry Education Group |
| Planet Fitness vs. Booking Holdings | Planet Fitness vs. Oriental Land Co | Planet Fitness vs. ANTA Sports Products | Planet Fitness vs. Li Ning Company |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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