Correlation Between Rayonier Advanced and Planet Fitness

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

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

Diversification Opportunities for Rayonier Advanced and Planet Fitness

0.08

Correlation Coefficient

Rayonier Advanced  Planet Fitness

Significant diversification

The 3 months correlation between Rayonier and Planet is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier Advanced Materials and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Rayonier Advanced 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 Rayonier Advanced Materials 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 Rayonier Advanced i.e., Rayonier Advanced and Planet Fitness go up and down completely randomly.

Pair Corralation between Rayonier Advanced and Planet Fitness

Assuming the 90 days horizon Rayonier Advanced is expected to generate 3.1 times less return on investment than Planet Fitness. In addition to that, Rayonier Advanced is 1.54 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 0.21 per unit of volatility. If you would invest  7,550  in Planet Fitness on October 25, 2024 and sell it today you would earn a total of  2,750  from holding Planet Fitness or generate 36.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Rayonier Advanced Materials  vs.  Planet Fitness

Rayonier Advanced

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rayonier Advanced Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Rayonier Advanced may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Planet Fitness

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 16 (%) 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 Rayonier Advanced and Planet Fitness

The main advantage of trading using opposite Rayonier Advanced and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rayonier Advanced 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 Rayonier Advanced Materials 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.