Correlation Between Liberty Media and Planet Fitness

Can any of the company-specific risk be diversified away by investing in both Liberty 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 Liberty 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 Liberty Media Corp and Planet Fitness Cl, you can compare the effects of market volatilities on Liberty 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 Liberty Media with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Planet Fitness.

Diversification Opportunities for Liberty Media and Planet Fitness

0.43

Correlation Coefficient

Liberty Media  Planet Fitness

Very weak diversification

The 3 months correlation between Liberty and Planet is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media Corp 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 Liberty 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 Liberty Media Corp 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 Liberty Media i.e., Liberty Media and Planet Fitness go up and down completely randomly.

Pair Corralation between Liberty Media and Planet Fitness

Assuming the 90 days trading horizon Liberty Media Corp is expected to under-perform the Planet Fitness. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Media Corp is 1.15 times less risky than Planet Fitness. The stock trades about -0.05 of its potential returns per unit of risk. The Planet Fitness Cl is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,040  in Planet Fitness Cl on December 29, 2024 and sell it today you would lose (157.00) from holding Planet Fitness Cl or give up 1.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Liberty Media Corp  vs.  Planet Fitness Cl

Liberty Media Corp

Risk-Adjusted Performance

Very Weak

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

Planet Fitness Cl

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Liberty Media and Planet Fitness

The main advantage of trading using opposite Liberty Media and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty 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 Liberty Media Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.