Correlation Between Planet Fitness and Madison Square
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Madison Square 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 Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Madison Square Garden, you can compare the effects of market volatilities on Planet Fitness and Madison Square 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 Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Madison Square.
Diversification Opportunities for Planet Fitness and Madison Square
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Planet and Madison is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Madison Square Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Square Garden 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 Madison Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Square Garden has no effect on the direction of Planet Fitness i.e., Planet Fitness and Madison Square go up and down completely randomly.
Pair Corralation between Planet Fitness and Madison Square
Given the investment horizon of 90 days Planet Fitness is expected to generate 1.13 times more return on investment than Madison Square. However, Planet Fitness is 1.13 times more volatile than Madison Square Garden. It trades about 0.37 of its potential returns per unit of risk. Madison Square Garden is currently generating about -0.24 per unit of risk. If you would invest 7,981 in Planet Fitness on August 24, 2024 and sell it today you would earn a total of 2,021 from holding Planet Fitness or generate 25.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Fitness vs. Madison Square Garden
Performance |
| Timeline |
| Planet Fitness |
| Madison Square Garden |
Planet Fitness and Madison Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Madison Square
The main advantage of trading using opposite Planet Fitness and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Madison Square 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 Madison Square will offset losses from the drop in Madison Square'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 |
| Madison Square vs. Madison Square Garden | Madison Square vs. Graham Holdings Co | Madison Square vs. Atlanta Braves Holdings, | Madison Square vs. Live Nation Entertainment |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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