Correlation Between Kinsale Capital and Planet Fitness

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

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

Diversification Opportunities for Kinsale Capital and Planet Fitness

0.31

Correlation Coefficient

Kinsale Capital  Planet Fitness

Weak diversification

The 3 months correlation between Kinsale and Planet is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kinsale Capital Group and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Kinsale Capital 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 Kinsale Capital Group 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 Kinsale Capital i.e., Kinsale Capital and Planet Fitness go up and down completely randomly.

Pair Corralation between Kinsale Capital and Planet Fitness

Given the investment horizon of 90 days Kinsale Capital Group is expected to under-perform the Planet Fitness. In addition to that, Kinsale Capital is 1.3 times more volatile than Planet Fitness. It trades about -0.18 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 22, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kinsale Capital Group  vs.  Planet Fitness

Kinsale Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinsale Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kinsale Capital is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Planet Fitness

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 16 (%) 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 Kinsale Capital and Planet Fitness

The main advantage of trading using opposite Kinsale Capital and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinsale Capital 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 Kinsale Capital Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.