Correlation Between Planet Fitness and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Freedom Bank 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 Freedom Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Freedom Bank of, you can compare the effects of market volatilities on Planet Fitness and Freedom Bank 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 Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Freedom Bank.
Diversification Opportunities for Planet Fitness and Freedom Bank
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Planet and Freedom is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank 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 Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Planet Fitness i.e., Planet Fitness and Freedom Bank go up and down completely randomly.
Pair Corralation between Planet Fitness and Freedom Bank
Given the investment horizon of 90 days Planet Fitness is expected to generate 2.04 times more return on investment than Freedom Bank. However, Planet Fitness is 2.04 times more volatile than Freedom Bank of. It trades about 0.06 of its potential returns per unit of risk. Freedom Bank of is currently generating about 0.02 per unit of risk. If you would invest 6,942 in Planet Fitness on September 4, 2024 and sell it today you would earn a total of 3,016 from holding Planet Fitness or generate 43.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.87% |
| Values | Daily Returns |
Planet Fitness vs. Freedom Bank of
Performance |
| Timeline |
| Planet Fitness |
| Freedom Bank |
Planet Fitness and Freedom Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Freedom Bank
The main advantage of trading using opposite Planet Fitness and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Freedom Bank 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.| Planet Fitness vs. Hyatt Hotels | Planet Fitness vs. Smart Share Global | Planet Fitness vs. Sweetgreen | Planet Fitness vs. Wyndham Hotels Resorts |
| Freedom Bank vs. Western Asset Global | Freedom Bank vs. Invesco Trust For | Freedom Bank vs. Logan Ridge Finance | Freedom Bank vs. Invesco Advantage MIT |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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