Correlation Between GrafTech International and Planet Fitness

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

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

Diversification Opportunities for GrafTech International and Planet Fitness

0.56

Correlation Coefficient

GrafTech International  Planet Fitness

Very weak diversification

The 3 months correlation between GrafTech and Planet is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding GrafTech International and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and GrafTech International 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 GrafTech International 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 GrafTech International i.e., GrafTech International and Planet Fitness go up and down completely randomly.

Pair Corralation between GrafTech International and Planet Fitness

Assuming the 90 days horizon GrafTech International is expected to under-perform the Planet Fitness. In addition to that, GrafTech International is 2.42 times more volatile than Planet Fitness. It trades about -0.12 of its total potential returns per unit of risk. Planet Fitness is currently generating about -0.03 per unit of volatility. If you would invest  9,650  in Planet Fitness on December 23, 2024 and sell it today you would lose (500.00) from holding Planet Fitness or give up 5.18% of portfolio value over 90 days.

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

GrafTech International  vs.  Planet Fitness

GrafTech International

Risk-Adjusted Performance

Very Weak

Over the last 90 days GrafTech International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite nearly stable basic indicators, Planet Fitness is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GrafTech International and Planet Fitness

The main advantage of trading using opposite GrafTech International and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GrafTech International 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 GrafTech International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.