Correlation Between Sensient Technologies and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Planet Fitness 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 Sensient Technologies and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Planet Fitness, you can compare the effects of market volatilities on Sensient Technologies and Planet Fitness 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 Sensient Technologies with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Planet Fitness.
Diversification Opportunities for Sensient Technologies and Planet Fitness
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sensient and Planet is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Sensient Technologies 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 Sensient Technologies are associated (or correlated) with Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Planet Fitness go up and down completely randomly.
Pair Corralation between Sensient Technologies and Planet Fitness
Considering the 90-day investment horizon Sensient Technologies is expected to generate 12.61 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, Sensient Technologies is 1.53 times less risky than Planet Fitness. It trades about 0.03 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 8,225 in Planet Fitness on August 26, 2024 and sell it today you would earn a total of 1,928 from holding Planet Fitness or generate 23.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensient Technologies vs. Planet Fitness
Performance |
| Timeline |
| Sensient Technologies |
| Planet Fitness |
Sensient Technologies and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Planet Fitness
The main advantage of trading using opposite Sensient Technologies and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, Planet Fitness 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 Planet Fitness will offset losses from the drop in Planet Fitness' long position.| Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller | Sensient Technologies vs. Northern Technologies |
| Planet Fitness vs. Life Time Group | Planet Fitness vs. Bowlero Corp | Planet Fitness vs. JAKKS Pacific | Planet Fitness vs. Six Flags 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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