Correlation Between Planet Fitness and Nikon Corp
Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Nikon Corp 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 Nikon Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Fitness and Nikon Corp, you can compare the effects of market volatilities on Planet Fitness and Nikon Corp 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 Nikon Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Nikon Corp.
Diversification Opportunities for Planet Fitness and Nikon Corp
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Planet and Nikon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Nikon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikon Corp 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 Nikon Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nikon Corp has no effect on the direction of Planet Fitness i.e., Planet Fitness and Nikon Corp go up and down completely randomly.
Pair Corralation between Planet Fitness and Nikon Corp
Given the investment horizon of 90 days Planet Fitness is expected to generate 0.7 times more return on investment than Nikon Corp. However, Planet Fitness is 1.42 times less risky than Nikon Corp. It trades about 0.07 of its potential returns per unit of risk. Nikon Corp is currently generating about 0.03 per unit of risk. If you would invest 6,294 in Planet Fitness on December 3, 2024 and sell it today you would earn a total of 3,012 from holding Planet Fitness or generate 47.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Planet Fitness vs. Nikon Corp
Performance |
Timeline |
Planet Fitness |
Nikon Corp |
Planet Fitness and Nikon Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Planet Fitness and Nikon Corp
The main advantage of trading using opposite Planet Fitness and Nikon Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Fitness position performs unexpectedly, Nikon Corp 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 Nikon Corp will offset losses from the drop in Nikon Corp's long position.Planet Fitness vs. Life Time Group | Planet Fitness vs. JAKKS Pacific | Planet Fitness vs. Six Flags Entertainment | Planet Fitness vs. Johnson Outdoors |
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Check out your portfolio center.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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