Correlation Between Callaway Golf and Planet Fitness

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

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

Diversification Opportunities for Callaway Golf and Planet Fitness

0.67

Correlation Coefficient

Callaway Golf  Planet Fitness

Poor diversification

The 3 months correlation between Callaway and Planet is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Callaway Golf and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Callaway Golf 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 Callaway Golf 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 Callaway Golf i.e., Callaway Golf and Planet Fitness go up and down completely randomly.

Pair Corralation between Callaway Golf and Planet Fitness

Given the investment horizon of 90 days Callaway Golf is expected to under-perform the Planet Fitness. In addition to that, Callaway Golf is 1.73 times more volatile than Planet Fitness. It trades about -0.06 of its total potential returns per unit of risk. Planet Fitness is currently generating about -0.02 per unit of volatility. If you would invest  9,968  in Planet Fitness on December 29, 2024 and sell it today you would lose (346.00) from holding Planet Fitness or give up 3.47% of portfolio value over 90 days.

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

Callaway Golf  vs.  Planet Fitness

Callaway Golf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Callaway Golf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains 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. In spite of comparatively stable basic indicators, Planet Fitness is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Callaway Golf and Planet Fitness

The main advantage of trading using opposite Callaway Golf and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Callaway Golf 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 Callaway Golf 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.