Correlation Between Europa Metals and Planet Fitness

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

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

Diversification Opportunities for Europa Metals and Planet Fitness

0.72

Correlation Coefficient

Europa Metals  Planet Fitness

Poor diversification

The 3 months correlation between Europa and Planet is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Europa Metals 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 Europa Metals 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 Europa Metals 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 Europa Metals i.e., Europa Metals and Planet Fitness go up and down completely randomly.

Pair Corralation between Europa Metals and Planet Fitness

Assuming the 90 days trading horizon Europa Metals is expected to under-perform the Planet Fitness. In addition to that, Europa Metals is 2.93 times more volatile than Planet Fitness Cl. It trades about -0.1 of its total potential returns per unit of risk. Planet Fitness Cl is currently generating about 0.01 per unit of volatility. If you would invest  10,087  in Planet Fitness Cl on December 24, 2024 and sell it today you would earn a total of  13.00  from holding Planet Fitness Cl or generate 0.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.94%
Values	Daily Returns

Europa Metals  vs.  Planet Fitness Cl

Europa Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Europa Metals 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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

Pair Trading with Europa Metals and Planet Fitness

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

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.