Correlation Between Virgin Group and Planet Fitness

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

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

Diversification Opportunities for Virgin Group and Planet Fitness

0.41

Correlation Coefficient

Virgin Group  Planet Fitness

Very weak diversification

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

Pair Corralation between Virgin Group and Planet Fitness

Given the investment horizon of 90 days Virgin Group is expected to generate 4.1 times less return on investment than Planet Fitness. In addition to that, Virgin Group is 4.42 times more volatile than Planet Fitness. It trades about 0.01 of its total potential returns per unit of risk. Planet Fitness is currently generating about 0.17 per unit of volatility. If you would invest  10,020  in Planet Fitness on October 23, 2024 and sell it today you would earn a total of  426.00  from holding Planet Fitness or generate 4.25% return on investment over 90 days.

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

Virgin Group Acquisition  vs.  Planet Fitness

Virgin Group Acquisition

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virgin Group Acquisition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Virgin Group is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Planet Fitness

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Planet Fitness unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virgin Group and Planet Fitness

The main advantage of trading using opposite Virgin Group and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Group 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 Virgin Group Acquisition 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.