Correlation Between Flanigans Enterprises and Planet Fitness

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

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

Diversification Opportunities for Flanigans Enterprises and Planet Fitness

0.06

Correlation Coefficient

Flanigans Enterprises  Planet Fitness

Significant diversification

The 3 months correlation between Flanigans and Planet is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Flanigans Enterprises and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Flanigans Enterprises 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 Flanigans Enterprises 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 Flanigans Enterprises i.e., Flanigans Enterprises and Planet Fitness go up and down completely randomly.

Pair Corralation between Flanigans Enterprises and Planet Fitness

Considering the 90-day investment horizon Flanigans Enterprises is expected to generate 0.75 times more return on investment than Planet Fitness. However, Flanigans Enterprises is 1.34 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 -0.02 per unit of risk. If you would invest  2,549  in Flanigans Enterprises on December 28, 2024 and sell it today you would lose (50.00) from holding Flanigans Enterprises or give up 1.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Flanigans Enterprises  vs.  Planet Fitness

Flanigans Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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. In spite of comparatively stable basic indicators, Planet Fitness is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Flanigans Enterprises and Planet Fitness

The main advantage of trading using opposite Flanigans Enterprises and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flanigans Enterprises 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 Flanigans Enterprises 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 CEOs Directory module to screen CEOs from public companies around the world.