Correlation Between Planet Fitness and CF Industries
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and CF Industries 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 CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and CF Industries Holdings, you can compare the effects of market volatilities on Planet Fitness and CF Industries 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 CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and CF Industries.
Diversification Opportunities for Planet Fitness and CF Industries
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Planet and CF Industries is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings 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 CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of Planet Fitness i.e., Planet Fitness and CF Industries go up and down completely randomly.
Pair Corralation between Planet Fitness and CF Industries
Given the investment horizon of 90 days Planet Fitness is expected to generate 1.12 times more return on investment than CF Industries. However, Planet Fitness is 1.12 times more volatile than CF Industries Holdings. It trades about 0.03 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.01 per unit of risk. If you would invest 8,105 in Planet Fitness on November 19, 2024 and sell it today you would earn a total of 1,994 from holding Planet Fitness or generate 24.6% 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. CF Industries Holdings
Performance |
| Timeline |
| Planet Fitness |
| CF Industries Holdings |
Planet Fitness and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and CF Industries
The main advantage of trading using opposite Planet Fitness and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, CF Industries 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 CF Industries will offset losses from the drop in CF Industries' long position.| Planet Fitness vs. Life Time Group | Planet Fitness vs. JAKKS Pacific | Planet Fitness vs. Six Flags Entertainment | Planet Fitness vs. Johnson Outdoors |
| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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