Correlation Between Summa Silver and Planet Fitness

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

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

Diversification Opportunities for Summa Silver and Planet Fitness

-0.9

Correlation Coefficient

Summa Silver  Planet Fitness

Pay attention - limited upside

The 3 months correlation between Summa and Planet is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Summa Silver 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 Summa Silver Corp 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 Summa Silver i.e., Summa Silver and Planet Fitness go up and down completely randomly.

Pair Corralation between Summa Silver and Planet Fitness

Assuming the 90 days horizon Summa Silver Corp is expected to under-perform the Planet Fitness. In addition to that, Summa Silver is 2.05 times more volatile than Planet Fitness. It trades about -0.1 of its total potential returns per unit of risk. Planet Fitness is currently generating about 0.16 per unit of volatility. If you would invest  8,231  in Planet Fitness on September 12, 2024 and sell it today you would earn a total of  1,786  from holding Planet Fitness or generate 21.7% return on investment over 90 days.

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

Summa Silver Corp  vs.  Planet Fitness

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Planet Fitness

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Planet Fitness unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summa Silver and Planet Fitness

The main advantage of trading using opposite Summa Silver and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summa Silver 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 Summa Silver Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.