Correlation Between Visa and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Planet Fitness Cl, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Planet Fitness.
Diversification Opportunities for Visa and Planet Fitness
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Planet is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Planet Fitness Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness Cl and Visa 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 Visa Class A 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 Cl has no effect on the direction of Visa i.e., Visa and Planet Fitness go up and down completely randomly.
Pair Corralation between Visa and Planet Fitness
Taking into account the 90-day investment horizon Visa is expected to generate 2.24 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, Visa Class A is 2.53 times less risky than Planet Fitness. It trades about 0.37 of its potential returns per unit of risk. Planet Fitness Cl is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 8,127 in Planet Fitness Cl on August 27, 2024 and sell it today you would earn a total of 1,947 from holding Planet Fitness Cl or generate 23.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Planet Fitness Cl
Performance |
| Timeline |
| Visa Class A |
| Planet Fitness Cl |
Visa and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Planet Fitness
The main advantage of trading using opposite Visa and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Planet Fitness vs. Samsung Electronics Co | Planet Fitness vs. Samsung Electronics Co | Planet Fitness vs. Hyundai Motor | Planet Fitness vs. Toyota Motor Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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