Correlation Between Planet Fitness and Chemtrade Logistics

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

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

Diversification Opportunities for Planet Fitness and Chemtrade Logistics

0.2

Correlation Coefficient

Planet Fitness  Chemtrade Logistics

Modest diversification

The 3 months correlation between Planet and Chemtrade is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Chemtrade Logistics Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemtrade Logistics and Planet Fitness 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 Planet Fitness are associated (or correlated) with Chemtrade Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemtrade Logistics has no effect on the direction of Planet Fitness i.e., Planet Fitness and Chemtrade Logistics go up and down completely randomly.

Pair Corralation between Planet Fitness and Chemtrade Logistics

Given the investment horizon of 90 days Planet Fitness is expected to generate 1.08 times more return on investment than Chemtrade Logistics. However, Planet Fitness is 1.08 times more volatile than Chemtrade Logistics Income. It trades about 0.01 of its potential returns per unit of risk. Chemtrade Logistics Income is currently generating about -0.07 per unit of risk. If you would invest  10,020  in Planet Fitness on December 22, 2024 and sell it today you would lose (18.00) from holding Planet Fitness or give up 0.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.44%
Values	Daily Returns

Planet Fitness  vs.  Chemtrade Logistics Income

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.

Chemtrade Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Planet Fitness and Chemtrade Logistics

The main advantage of trading using opposite Planet Fitness and Chemtrade Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Chemtrade Logistics 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 Chemtrade Logistics will offset losses from the drop in Chemtrade Logistics' long position.

The idea behind Planet Fitness and Chemtrade Logistics Income 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.