Correlation Between Planet Fitness and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Merit Medical Systems, you can compare the effects of market volatilities on Planet Fitness and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Merit Medical.
Diversification Opportunities for Planet Fitness and Merit Medical
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Planet and Merit is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Planet Fitness i.e., Planet Fitness and Merit Medical go up and down completely randomly.
Pair Corralation between Planet Fitness and Merit Medical
Given the investment horizon of 90 days Planet Fitness is expected to generate 2.32 times more return on investment than Merit Medical. However, Planet Fitness is 2.32 times more volatile than Merit Medical Systems. It trades about 0.42 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.21 per unit of risk. If you would invest 7,852 in Planet Fitness on September 1, 2024 and sell it today you would earn a total of 2,103 from holding Planet Fitness or generate 26.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Fitness vs. Merit Medical Systems
Performance |
| Timeline |
| Planet Fitness |
| Merit Medical Systems |
Planet Fitness and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Merit Medical
The main advantage of trading using opposite Planet Fitness and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Planet Fitness vs. The Wendys Co | Planet Fitness vs. Shake Shack | Planet Fitness vs. Papa Johns International | Planet Fitness vs. Darden Restaurants |
| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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