Correlation Between Planet Fitness and Yamaha Corp

Can any of the company-specific risk be diversified away by investing in both Planet Fitness and Yamaha 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 Yamaha 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 Yamaha Corp DRC, you can compare the effects of market volatilities on Planet Fitness and Yamaha 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 Yamaha Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Yamaha Corp.

Diversification Opportunities for Planet Fitness and Yamaha Corp

-0.31

Correlation Coefficient

Planet Fitness  Yamaha Corp

Very good diversification

The 3 months correlation between Planet and Yamaha is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Yamaha Corp DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha Corp DRC 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 Yamaha Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha Corp DRC has no effect on the direction of Planet Fitness i.e., Planet Fitness and Yamaha Corp go up and down completely randomly.

Pair Corralation between Planet Fitness and Yamaha Corp

Given the investment horizon of 90 days Planet Fitness is expected to under-perform the Yamaha Corp. In addition to that, Planet Fitness is 1.04 times more volatile than Yamaha Corp DRC. It trades about -0.05 of its total potential returns per unit of risk. Yamaha Corp DRC is currently generating about -0.03 per unit of volatility. If you would invest  751.00  in Yamaha Corp DRC on December 3, 2024 and sell it today you would lose (29.00) from holding Yamaha Corp DRC or give up 3.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Planet Fitness  vs.  Yamaha Corp DRC

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.

Yamaha Corp DRC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yamaha Corp DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Yamaha Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Planet Fitness and Yamaha Corp

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

The idea behind Planet Fitness and Yamaha Corp DRC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.