Correlation Between Planet Fitness and Miton UK

Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Miton UK 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 Miton UK 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 Miton UK MicroCap, you can compare the effects of market volatilities on Planet Fitness and Miton UK 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 Miton UK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Miton UK.

Diversification Opportunities for Planet Fitness and Miton UK

0.21

Correlation Coefficient

Planet Fitness  Miton UK

Modest diversification

The 3 months correlation between Planet and Miton is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and Miton UK MicroCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miton UK MicroCap 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 Miton UK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miton UK MicroCap has no effect on the direction of Planet Fitness i.e., Planet Fitness and Miton UK go up and down completely randomly.

Pair Corralation between Planet Fitness and Miton UK

Assuming the 90 days trading horizon Planet Fitness Cl is expected to generate 2.11 times more return on investment than Miton UK. However, Planet Fitness is 2.11 times more volatile than Miton UK MicroCap. It trades about 0.03 of its potential returns per unit of risk. Miton UK MicroCap is currently generating about 0.02 per unit of risk. If you would invest  9,874  in Planet Fitness Cl on October 10, 2024 and sell it today you would earn a total of  71.00  from holding Planet Fitness Cl or generate 0.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Planet Fitness Cl  vs.  Miton UK MicroCap

Planet Fitness Cl

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness Cl are ranked lower than 13 (%) 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.

Miton UK MicroCap

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Miton UK MicroCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Miton UK 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 Miton UK

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

The idea behind Planet Fitness Cl and Miton UK MicroCap 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.