Correlation Between Brunswick and Planet Fitness

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

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

Diversification Opportunities for Brunswick and Planet Fitness

-0.5

Correlation Coefficient

Brunswick  Planet Fitness

Very good diversification

The 3 months correlation between Brunswick and Planet is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Brunswick 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 Brunswick are associated (or correlated) with Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness has no effect on the direction of Brunswick i.e., Brunswick and Planet Fitness go up and down completely randomly.

Pair Corralation between Brunswick and Planet Fitness

Allowing for the 90-day total investment horizon Brunswick is expected to generate 4.72 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, Brunswick is 1.04 times less risky than Planet Fitness. It trades about 0.01 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7,880  in Planet Fitness on September 20, 2024 and sell it today you would earn a total of  2,038  from holding Planet Fitness or generate 25.86% return on investment over 90 days.

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

Brunswick  vs.  Planet Fitness

Brunswick

Risk-Adjusted Performance

0 of 100

Very Weak

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

Planet Fitness

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Planet Fitness unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brunswick and Planet Fitness

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

The idea behind Brunswick and Planet Fitness 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.