Correlation Between Planet Fitness and Sonos
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Sonos 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 Sonos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Sonos Inc, you can compare the effects of market volatilities on Planet Fitness and Sonos 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 Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Sonos.
Diversification Opportunities for Planet Fitness and Sonos
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Planet and Sonos is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Planet Fitness i.e., Planet Fitness and Sonos go up and down completely randomly.
Pair Corralation between Planet Fitness and Sonos
Given the investment horizon of 90 days Planet Fitness is expected to generate 0.93 times more return on investment than Sonos. However, Planet Fitness is 1.07 times less risky than Sonos. It trades about 0.39 of its potential returns per unit of risk. Sonos Inc is currently generating about 0.09 per unit of risk. If you would invest 8,014 in Planet Fitness on August 30, 2024 and sell it today you would earn a total of 2,088 from holding Planet Fitness or generate 26.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Planet Fitness vs. Sonos Inc
Performance |
| Timeline |
| Planet Fitness |
| Sonos Inc |
Planet Fitness and Sonos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Fitness and Sonos
The main advantage of trading using opposite Planet Fitness and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Sonos 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 Sonos will offset losses from the drop in Sonos' long position.| Planet Fitness vs. Chipotle Mexican Grill | Planet Fitness vs. Yum Brands | Planet Fitness vs. The Wendys Co | Planet Fitness vs. McDonalds |
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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