Correlation Between Future Metals and Planet Fitness

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

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

Diversification Opportunities for Future Metals and Planet Fitness

-0.02

Correlation Coefficient

Future Metals  Planet Fitness

Good diversification

The 3 months correlation between Future and Planet is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL 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 Future Metals 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 Future Metals NL 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 Future Metals i.e., Future Metals and Planet Fitness go up and down completely randomly.

Pair Corralation between Future Metals and Planet Fitness

Assuming the 90 days trading horizon Future Metals is expected to generate 2.48 times less return on investment than Planet Fitness. In addition to that, Future Metals is 1.16 times more volatile than Planet Fitness Cl. It trades about 0.06 of its total potential returns per unit of risk. Planet Fitness Cl is currently generating about 0.16 per unit of volatility. If you would invest  7,971  in Planet Fitness Cl on September 3, 2024 and sell it today you would earn a total of  1,991  from holding Planet Fitness Cl or generate 24.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Future Metals NL  vs.  Planet Fitness Cl

Future Metals NL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Future Metals NL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Future Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Planet Fitness Cl

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness Cl are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Planet Fitness unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Future Metals and Planet Fitness

The main advantage of trading using opposite Future Metals and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Metals 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 Future Metals NL and Planet Fitness Cl 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.