Correlation Between Baker Steel and Planet Fitness

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

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

Diversification Opportunities for Baker Steel and Planet Fitness

0.42

Correlation Coefficient

Baker Steel  Planet Fitness

Very weak diversification

The 3 months correlation between Baker and Planet is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and Planet Fitness Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness Cl and Baker Steel 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 Baker Steel Resources 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 Cl has no effect on the direction of Baker Steel i.e., Baker Steel and Planet Fitness go up and down completely randomly.

Pair Corralation between Baker Steel and Planet Fitness

Assuming the 90 days trading horizon Baker Steel Resources is expected to under-perform the Planet Fitness. But the stock apears to be less risky and, when comparing its historical volatility, Baker Steel Resources is 1.36 times less risky than Planet Fitness. The stock trades about -0.11 of its potential returns per unit of risk. The Planet Fitness Cl is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  9,962  in Planet Fitness Cl on December 1, 2024 and sell it today you would lose (742.00) from holding Planet Fitness Cl or give up 7.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.55%
Values	Daily Returns

Baker Steel Resources  vs.  Planet Fitness Cl

Baker Steel Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baker Steel Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Planet Fitness Cl

Risk-Adjusted Performance

Very Weak

Over the last 90 days Planet Fitness Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Baker Steel and Planet Fitness

The main advantage of trading using opposite Baker Steel and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Steel 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 Baker Steel Resources and Planet Fitness Cl 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.