Correlation Between Planet Fitness and Peloton Interactive
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Peloton Interactive 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 Peloton Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Peloton Interactive, you can compare the effects of market volatilities on Planet Fitness and Peloton Interactive 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 Peloton Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Peloton Interactive.
Diversification Opportunities for Planet Fitness and Peloton Interactive
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Planet and Peloton is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive 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 Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of Planet Fitness i.e., Planet Fitness and Peloton Interactive go up and down completely randomly.
Pair Corralation between Planet Fitness and Peloton Interactive
Given the investment horizon of 90 days Planet Fitness is expected to generate 1.62 times less return on investment than Peloton Interactive. But when comparing it to its historical volatility, Planet Fitness is 2.54 times less risky than Peloton Interactive. It trades about 0.06 of its potential returns per unit of risk. Peloton Interactive is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 822.00 in Peloton Interactive on August 31, 2024 and sell it today you would earn a total of 212.00 from holding Peloton Interactive or generate 25.79% 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. Peloton Interactive
Performance |
| Timeline |
| Planet Fitness |
| Peloton Interactive |
Planet Fitness and Peloton Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Peloton Interactive
The main advantage of trading using opposite Planet Fitness and Peloton Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Peloton Interactive 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 Peloton Interactive will offset losses from the drop in Peloton Interactive'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 |
| Peloton Interactive vs. Zoom Video Communications | Peloton Interactive vs. DocuSign | Peloton Interactive vs. Pinterest | Peloton Interactive vs. Teladoc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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