Correlation Between RYMAN HEALTHCAR and Planet Fitness

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

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

Diversification Opportunities for RYMAN HEALTHCAR and Planet Fitness

-0.51

Correlation Coefficient

RYMAN HEALTHCAR  Planet Fitness

Excellent diversification

The 3 months correlation between RYMAN and Planet is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding RYMAN HEALTHCAR and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and RYMAN HEALTHCAR 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 RYMAN HEALTHCAR 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 RYMAN HEALTHCAR i.e., RYMAN HEALTHCAR and Planet Fitness go up and down completely randomly.

Pair Corralation between RYMAN HEALTHCAR and Planet Fitness

Assuming the 90 days trading horizon RYMAN HEALTHCAR is expected to under-perform the Planet Fitness. In addition to that, RYMAN HEALTHCAR is 1.06 times more volatile than Planet Fitness. It trades about -0.04 of its total potential returns per unit of risk. Planet Fitness is currently generating about 0.08 per unit of volatility. If you would invest  6,700  in Planet Fitness on October 10, 2024 and sell it today you would earn a total of  3,050  from holding Planet Fitness or generate 45.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

RYMAN HEALTHCAR  vs.  Planet Fitness

RYMAN HEALTHCAR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RYMAN HEALTHCAR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, RYMAN HEALTHCAR is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Planet Fitness

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Planet Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RYMAN HEALTHCAR and Planet Fitness

The main advantage of trading using opposite RYMAN HEALTHCAR and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RYMAN HEALTHCAR 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 RYMAN HEALTHCAR 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.