Correlation Between Planet Fitness and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Insteel 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 Insteel 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 Insteel Industries, you can compare the effects of market volatilities on Planet Fitness and Insteel 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 Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Insteel Industries.
Diversification Opportunities for Planet Fitness and Insteel Industries
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Planet and Insteel is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries 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 Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Planet Fitness i.e., Planet Fitness and Insteel Industries go up and down completely randomly.
Pair Corralation between Planet Fitness and Insteel Industries
Given the investment horizon of 90 days Planet Fitness is expected to generate 0.88 times more return on investment than Insteel Industries. However, Planet Fitness is 1.13 times less risky than Insteel Industries. It trades about 0.08 of its potential returns per unit of risk. Insteel Industries is currently generating about -0.04 per unit of risk. If you would invest 7,296 in Planet Fitness on October 27, 2024 and sell it today you would earn a total of 3,258 from holding Planet Fitness or generate 44.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Fitness vs. Insteel Industries
Performance |
| Timeline |
| Planet Fitness |
| Insteel Industries |
Planet Fitness and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Insteel Industries
The main advantage of trading using opposite Planet Fitness and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Insteel 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 Insteel Industries will offset losses from the drop in Insteel 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 |
| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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