Correlation Between Planet Fitness and NAGOYA RAILROAD

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

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

Diversification Opportunities for Planet Fitness and NAGOYA RAILROAD

-0.64

Correlation Coefficient

Planet Fitness  NAGOYA RAILROAD

Excellent diversification

The 3 months correlation between Planet and NAGOYA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and NAGOYA RAILROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAGOYA RAILROAD 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 are associated (or correlated) with NAGOYA RAILROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAGOYA RAILROAD has no effect on the direction of Planet Fitness i.e., Planet Fitness and NAGOYA RAILROAD go up and down completely randomly.

Pair Corralation between Planet Fitness and NAGOYA RAILROAD

Assuming the 90 days horizon Planet Fitness is expected to under-perform the NAGOYA RAILROAD. In addition to that, Planet Fitness is 1.75 times more volatile than NAGOYA RAILROAD. It trades about -0.04 of its total potential returns per unit of risk. NAGOYA RAILROAD is currently generating about 0.08 per unit of volatility. If you would invest  1,030  in NAGOYA RAILROAD on December 20, 2024 and sell it today you would earn a total of  60.00  from holding NAGOYA RAILROAD or generate 5.83% return on investment over 90 days.

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

Planet Fitness  vs.  NAGOYA RAILROAD

Planet Fitness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Planet Fitness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Planet Fitness is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NAGOYA RAILROAD

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NAGOYA RAILROAD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NAGOYA RAILROAD may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Planet Fitness and NAGOYA RAILROAD

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

The idea behind Planet Fitness and NAGOYA RAILROAD 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.