Correlation Between Planet Fitness and Virgin Wines

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

Diversification Opportunities for Planet Fitness and Virgin Wines

-0.62

Correlation Coefficient

Planet Fitness  Virgin Wines

Excellent diversification

The 3 months correlation between Planet and Virgin is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and Virgin Wines UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Wines UK 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 Virgin Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Wines UK has no effect on the direction of Planet Fitness i.e., Planet Fitness and Virgin Wines go up and down completely randomly.

Pair Corralation between Planet Fitness and Virgin Wines

Assuming the 90 days trading horizon Planet Fitness is expected to generate 15.28 times less return on investment than Virgin Wines. But when comparing it to its historical volatility, Planet Fitness Cl is 1.39 times less risky than Virgin Wines. It trades about 0.02 of its potential returns per unit of risk. Virgin Wines UK is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,300  in Virgin Wines UK on December 23, 2024 and sell it today you would earn a total of  1,620  from holding Virgin Wines UK or generate 49.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

Planet Fitness Cl  vs.  Virgin Wines UK

Planet Fitness Cl

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness Cl are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Planet Fitness is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Virgin Wines UK

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virgin Wines UK are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Virgin Wines unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Planet Fitness and Virgin Wines

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

The idea behind Planet Fitness Cl and Virgin Wines UK 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.