Correlation Between Planet Fitness and Link Real

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

By analyzing existing cross correlation between Planet Fitness and Link Real Estate, you can compare the effects of market volatilities on Planet Fitness and Link Real 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 Link Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Link Real.

Diversification Opportunities for Planet Fitness and Link Real

-0.68

Correlation Coefficient

Planet Fitness  Link Real

Excellent diversification

The 3 months correlation between Planet and Link is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Link Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Real Estate 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 Link Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Real Estate has no effect on the direction of Planet Fitness i.e., Planet Fitness and Link Real go up and down completely randomly.

Pair Corralation between Planet Fitness and Link Real

Given the investment horizon of 90 days Planet Fitness is expected to generate 24.85 times less return on investment than Link Real. But when comparing it to its historical volatility, Planet Fitness is 1.2 times less risky than Link Real. It trades about 0.01 of its potential returns per unit of risk. Link Real Estate is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  410.00  in Link Real Estate on December 28, 2024 and sell it today you would earn a total of  76.00  from holding Link Real Estate or generate 18.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.67%
Values	Daily Returns

Planet Fitness  vs.  Link Real Estate

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.

Link Real Estate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Link Real Estate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Link Real reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Planet Fitness and Link Real

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

The idea behind Planet Fitness and Link Real Estate 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.