Correlation Between One Media and Planet Fitness

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

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

Diversification Opportunities for One Media and Planet Fitness

-0.13

Correlation Coefficient

One Media  Planet Fitness

Good diversification

The 3 months correlation between One and Planet is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding One Media iP 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 One Media 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 One Media iP 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 One Media i.e., One Media and Planet Fitness go up and down completely randomly.

Pair Corralation between One Media and Planet Fitness

Assuming the 90 days trading horizon One Media is expected to generate 11.25 times less return on investment than Planet Fitness. In addition to that, One Media is 1.05 times more volatile than Planet Fitness Cl. It trades about 0.01 of its total potential returns per unit of risk. Planet Fitness Cl is currently generating about 0.15 per unit of volatility. If you would invest  8,329  in Planet Fitness Cl on September 13, 2024 and sell it today you would earn a total of  1,881  from holding Planet Fitness Cl or generate 22.58% return on investment over 90 days.

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

One Media iP  vs.  Planet Fitness Cl

One Media iP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One Media iP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, One Media is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Planet Fitness Cl

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness Cl are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Planet Fitness unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One Media and Planet Fitness

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

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.