Correlation Between Planet Fitness and Sydbank

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

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

Diversification Opportunities for Planet Fitness and Sydbank

0.75

Correlation Coefficient

Planet Fitness  Sydbank

Poor diversification

The 3 months correlation between Planet and Sydbank is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank 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 Cl are associated (or correlated) with Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of Planet Fitness i.e., Planet Fitness and Sydbank go up and down completely randomly.

Pair Corralation between Planet Fitness and Sydbank

Assuming the 90 days trading horizon Planet Fitness Cl is expected to generate 1.89 times more return on investment than Sydbank. However, Planet Fitness is 1.89 times more volatile than Sydbank. It trades about 0.16 of its potential returns per unit of risk. Sydbank is currently generating about 0.05 per unit of risk. If you would invest  7,911  in Planet Fitness Cl on September 4, 2024 and sell it today you would earn a total of  1,996  from holding Planet Fitness Cl or generate 25.23% return on investment over 90 days.

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

Planet Fitness Cl  vs.  Sydbank

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.

Sydbank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sydbank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Planet Fitness and Sydbank

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

The idea behind Planet Fitness Cl and Sydbank 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.