Correlation Between Universal and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Universal 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 Universal and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal and Planet Fitness, you can compare the effects of market volatilities on Universal 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 Universal with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and Planet Fitness.
Diversification Opportunities for Universal and Planet Fitness
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Universal and Planet is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Universal and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Universal 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 Universal 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 Universal i.e., Universal and Planet Fitness go up and down completely randomly.
Pair Corralation between Universal and Planet Fitness
Considering the 90-day investment horizon Universal is expected to generate 1.55 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, Universal is 1.44 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 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,827 in Planet Fitness on September 12, 2024 and sell it today you would earn a total of 2,395 from holding Planet Fitness or generate 30.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal vs. Planet Fitness
Performance |
| Timeline |
| Universal |
| Planet Fitness |
Universal and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal and Planet Fitness
The main advantage of trading using opposite Universal and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal 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.| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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