Correlation Between Planet Fitness and Alliance Recovery
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Alliance Recovery 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 Alliance Recovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Alliance Recovery, you can compare the effects of market volatilities on Planet Fitness and Alliance Recovery 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 Alliance Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Alliance Recovery.
Diversification Opportunities for Planet Fitness and Alliance Recovery
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Planet and Alliance is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Alliance Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Recovery 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 Alliance Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Recovery has no effect on the direction of Planet Fitness i.e., Planet Fitness and Alliance Recovery go up and down completely randomly.
Pair Corralation between Planet Fitness and Alliance Recovery
Given the investment horizon of 90 days Planet Fitness is expected to generate 0.49 times more return on investment than Alliance Recovery. However, Planet Fitness is 2.04 times less risky than Alliance Recovery. It trades about 0.2 of its potential returns per unit of risk. Alliance Recovery is currently generating about 0.03 per unit of risk. If you would invest 6,381 in Planet Fitness on August 31, 2024 and sell it today you would earn a total of 3,574 from holding Planet Fitness or generate 56.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Planet Fitness vs. Alliance Recovery
Performance |
| Timeline |
| Planet Fitness |
| Alliance Recovery |
Planet Fitness and Alliance Recovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Alliance Recovery
The main advantage of trading using opposite Planet Fitness and Alliance Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Alliance Recovery 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 Alliance Recovery will offset losses from the drop in Alliance Recovery's long position.| Planet Fitness vs. Life Time Group | Planet Fitness vs. Bowlero Corp | Planet Fitness vs. JAKKS Pacific | Planet Fitness vs. Six Flags Entertainment |
| Alliance Recovery vs. American Leisure Holdings | Alliance Recovery vs. Supurva Healthcare Group | Alliance Recovery vs. China Health Management | Alliance Recovery vs. Embrace Change Acquisition |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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