Correlation Between Take Two and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Take Two 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 Take Two and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and Planet Fitness, you can compare the effects of market volatilities on Take Two 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 Take Two with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Planet Fitness.
Diversification Opportunities for Take Two and Planet Fitness
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Take and Planet is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Take Two 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 Take Two Interactive Software 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 Take Two i.e., Take Two and Planet Fitness go up and down completely randomly.
Pair Corralation between Take Two and Planet Fitness
Assuming the 90 days trading horizon Take Two is expected to generate 3.7 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, Take Two Interactive Software is 6.98 times less risky than Planet Fitness. It trades about 0.24 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,984 in Planet Fitness on September 12, 2024 and sell it today you would earn a total of 3,608 from holding Planet Fitness or generate 90.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Take Two Interactive Software vs. Planet Fitness
Performance |
Timeline |
Take Two Interactive |
Planet Fitness |
Take Two and Planet Fitness Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Take Two and Planet Fitness
The main advantage of trading using opposite Take Two and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two 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.Take Two vs. Deutsche Bank Aktiengesellschaft | Take Two vs. Zoom Video Communications | Take Two vs. Automatic Data Processing | Take Two vs. Mitsubishi UFJ Financial |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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