Correlation Between Planet Fitness and WESTERN LITHIUM

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

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

Diversification Opportunities for Planet Fitness and WESTERN LITHIUM

0.0

Correlation Coefficient

Planet Fitness  WESTERN LITHIUM

Pay attention - limited upside

The 3 months correlation between Planet and WESTERN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and WESTERN LITHIUM USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN LITHIUM USA 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 WESTERN LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN LITHIUM USA has no effect on the direction of Planet Fitness i.e., Planet Fitness and WESTERN LITHIUM go up and down completely randomly.

Pair Corralation between Planet Fitness and WESTERN LITHIUM

If you would invest  9,350  in Planet Fitness on October 10, 2024 and sell it today you would earn a total of  350.00  from holding Planet Fitness or generate 3.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Planet Fitness  vs.  WESTERN LITHIUM USA

Planet Fitness

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Planet Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

WESTERN LITHIUM USA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTERN LITHIUM USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, WESTERN LITHIUM is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Planet Fitness and WESTERN LITHIUM

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

The idea behind Planet Fitness and WESTERN LITHIUM USA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.