Correlation Between KNOT Offshore and Planet Fitness

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

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

Diversification Opportunities for KNOT Offshore and Planet Fitness

-0.68

Correlation Coefficient

KNOT Offshore  Planet Fitness

Excellent diversification

The 3 months correlation between KNOT and Planet is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and KNOT Offshore 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 KNOT Offshore Partners 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 KNOT Offshore i.e., KNOT Offshore and Planet Fitness go up and down completely randomly.

Pair Corralation between KNOT Offshore and Planet Fitness

Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Planet Fitness. In addition to that, KNOT Offshore is 1.44 times more volatile than Planet Fitness. It trades about -0.02 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  7,880  in Planet Fitness on September 20, 2024 and sell it today you would earn a total of  2,116  from holding Planet Fitness or generate 26.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

KNOT Offshore Partners  vs.  Planet Fitness

KNOT Offshore Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KNOT Offshore Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Planet Fitness

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 11 (%) 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 KNOT Offshore and Planet Fitness

The main advantage of trading using opposite KNOT Offshore and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore 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 KNOT Offshore Partners 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.