Correlation Between Planet Fitness and Neometals

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

Diversification Opportunities for Planet Fitness and Neometals

-0.46

Correlation Coefficient

Planet Fitness  Neometals

Very good diversification

The 3 months correlation between Planet and Neometals is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Planet Fitness i.e., Planet Fitness and Neometals go up and down completely randomly.

Pair Corralation between Planet Fitness and Neometals

Assuming the 90 days trading horizon Planet Fitness Cl is expected to under-perform the Neometals. But the stock apears to be less risky and, when comparing its historical volatility, Planet Fitness Cl is 3.9 times less risky than Neometals. The stock trades about -0.35 of its potential returns per unit of risk. The Neometals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  350.00  in Neometals on November 29, 2024 and sell it today you would earn a total of  0.00  from holding Neometals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	23.81%
Values	Daily Returns

Planet Fitness Cl  vs.  Neometals

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Neometals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Planet Fitness and Neometals

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

The idea behind Planet Fitness Cl and Neometals 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.