Correlation Between Planet Fitness and Value Line

Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Value Line 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 Value Line into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Planet Fitness and Value Line Income, you can compare the effects of market volatilities on Planet Fitness and Value Line 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 Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Value Line.

Diversification Opportunities for Planet Fitness and Value Line

0.22

Correlation Coefficient

Planet Fitness  Value Line

Modest diversification

The 3 months correlation between Planet and Value is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Value Line Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Income 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Income has no effect on the direction of Planet Fitness i.e., Planet Fitness and Value Line go up and down completely randomly.

Pair Corralation between Planet Fitness and Value Line

Given the investment horizon of 90 days Planet Fitness is expected to generate 2.61 times more return on investment than Value Line. However, Planet Fitness is 2.61 times more volatile than Value Line Income. It trades about 0.13 of its potential returns per unit of risk. Value Line Income is currently generating about 0.17 per unit of risk. If you would invest  6,027  in Planet Fitness on February 26, 2024 and sell it today you would earn a total of  327.00  from holding Planet Fitness or generate 5.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Planet Fitness  vs.  Value Line Income

Planet Fitness

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Planet Fitness is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Value Line Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Value Line Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Value Line is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Planet Fitness and Value Line

The main advantage of trading using opposite Planet Fitness and Value Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Value Line 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 Value Line will offset losses from the drop in Value Line's long position.

The idea behind Planet Fitness and Value Line Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Stocks Directory module to find actively traded stocks across global markets.