Correlation Between Planet Fitness and Escalade Incorporated
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Escalade Incorporated 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 Escalade Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Escalade Incorporated, you can compare the effects of market volatilities on Planet Fitness and Escalade Incorporated 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 Escalade Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Escalade Incorporated.
Diversification Opportunities for Planet Fitness and Escalade Incorporated
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Planet and Escalade is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Escalade Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escalade Incorporated 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 Escalade Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Escalade Incorporated has no effect on the direction of Planet Fitness i.e., Planet Fitness and Escalade Incorporated go up and down completely randomly.
Pair Corralation between Planet Fitness and Escalade Incorporated
Given the investment horizon of 90 days Planet Fitness is expected to generate 1.32 times less return on investment than Escalade Incorporated. But when comparing it to its historical volatility, Planet Fitness is 1.27 times less risky than Escalade Incorporated. It trades about 0.03 of its potential returns per unit of risk. Escalade Incorporated is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,179 in Escalade Incorporated on August 27, 2024 and sell it today you would earn a total of 344.00 from holding Escalade Incorporated or generate 29.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Fitness vs. Escalade Incorporated
Performance |
| Timeline |
| Planet Fitness |
| Escalade Incorporated |
Planet Fitness and Escalade Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Escalade Incorporated
The main advantage of trading using opposite Planet Fitness and Escalade Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Escalade Incorporated 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 Escalade Incorporated will offset losses from the drop in Escalade Incorporated'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 |
| Escalade Incorporated vs. Johnson Outdoors | Escalade Incorporated vs. First Business Financial | Escalade Incorporated vs. Flexsteel Industries | Escalade Incorporated vs. Superior Uniform Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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