Correlation Between Escalade Incorporated and Planet Fitness

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

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

Diversification Opportunities for Escalade Incorporated and Planet Fitness

0.41

Correlation Coefficient

Escalade Incorporated  Planet Fitness

Very weak diversification

The 3 months correlation between Escalade and Planet is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Escalade Incorporated and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Escalade Incorporated 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 Escalade Incorporated 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 Escalade Incorporated i.e., Escalade Incorporated and Planet Fitness go up and down completely randomly.

Pair Corralation between Escalade Incorporated and Planet Fitness

Given the investment horizon of 90 days Escalade Incorporated is expected to generate 1.58 times more return on investment than Planet Fitness. However, Escalade Incorporated is 1.58 times more volatile than Planet Fitness. It trades about 0.04 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.04 per unit of risk. If you would invest  1,439  in Escalade Incorporated on November 19, 2024 and sell it today you would earn a total of  70.00  from holding Escalade Incorporated or generate 4.86% return on investment over 90 days.

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

Escalade Incorporated  vs.  Planet Fitness

Escalade Incorporated

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Escalade Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Escalade Incorporated may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Planet Fitness

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 Escalade Incorporated and Planet Fitness

The main advantage of trading using opposite Escalade Incorporated and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Escalade Incorporated 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 Escalade Incorporated 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.