Correlation Between Planet Fitness and Software Circle

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

By analyzing existing cross correlation between Planet Fitness Cl and Software Circle plc, you can compare the effects of market volatilities on Planet Fitness and Software Circle 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 Software Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Software Circle.

Diversification Opportunities for Planet Fitness and Software Circle

-0.14

Correlation Coefficient

Planet Fitness  Software Circle

Good diversification

The 3 months correlation between Planet and Software is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and Software Circle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Circle plc 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 Cl are associated (or correlated) with Software Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Circle plc has no effect on the direction of Planet Fitness i.e., Planet Fitness and Software Circle go up and down completely randomly.

Pair Corralation between Planet Fitness and Software Circle

Assuming the 90 days trading horizon Planet Fitness Cl is expected to generate 0.93 times more return on investment than Software Circle. However, Planet Fitness Cl is 1.07 times less risky than Software Circle. It trades about 0.16 of its potential returns per unit of risk. Software Circle plc is currently generating about 0.04 per unit of risk. If you would invest  9,433  in Planet Fitness Cl on April 22, 2025 and sell it today you would earn a total of  1,699  from holding Planet Fitness Cl or generate 18.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

Planet Fitness Cl  vs.  Software Circle plc

Planet Fitness Cl

Risk-Adjusted Performance

Good

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

Software Circle plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Software Circle plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Software Circle is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Planet Fitness and Software Circle

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

The idea behind Planet Fitness Cl and Software Circle plc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.