Correlation Between Extra Space and Planet Fitness

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

By analyzing existing cross correlation between Extra Space Storage and Planet Fitness, you can compare the effects of market volatilities on Extra Space 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 Extra Space with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Planet Fitness.

Diversification Opportunities for Extra Space and Planet Fitness

0.0

Correlation Coefficient

Extra Space  Planet Fitness

Pay attention - limited upside

The 3 months correlation between Extra and Planet is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Extra Space 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 Extra Space Storage 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 Extra Space i.e., Extra Space and Planet Fitness go up and down completely randomly.

Pair Corralation between Extra Space and Planet Fitness

If you would invest  24,852  in Extra Space Storage on September 3, 2024 and sell it today you would earn a total of  1,245  from holding Extra Space Storage or generate 5.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Extra Space Storage  vs.  Planet Fitness

Extra Space Storage

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Extra Space Storage are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Extra Space may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Planet Fitness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Planet Fitness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Planet Fitness is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Extra Space and Planet Fitness

The main advantage of trading using opposite Extra Space and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space 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.

The idea behind Extra Space Storage and Planet Fitness 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..