Correlation Between Planet Fitness and TR Property

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

Diversification Opportunities for Planet Fitness and TR Property

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Planet and TRY is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and TR Property Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TR Property Investment 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 TR Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TR Property Investment has no effect on the direction of Planet Fitness i.e., Planet Fitness and TR Property go up and down completely randomly.

Pair Corralation between Planet Fitness and TR Property

Assuming the 90 days trading horizon Planet Fitness Cl is expected to generate 2.24 times more return on investment than TR Property. However, Planet Fitness is 2.24 times more volatile than TR Property Investment. It trades about 0.16 of its potential returns per unit of risk. TR Property Investment is currently generating about -0.09 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 Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.38%
ValuesDaily Returns

Planet Fitness Cl  vs.  TR Property Investment

 Performance 
       Timeline  
Planet Fitness Cl 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
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.
TR Property Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days TR Property Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TR Property is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Planet Fitness and TR Property Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Planet Fitness and TR Property

The main advantage of trading using opposite Planet Fitness and TR Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, TR Property 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 TR Property will offset losses from the drop in TR Property's long position.
The idea behind Planet Fitness Cl and TR Property Investment 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.
Check out your portfolio center.
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.

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