Correlation Between T4F Entretenimento and Planet Fitness

Can any of the company-specific risk be diversified away by investing in both T4F Entretenimento 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 T4F Entretenimento and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between T4F Entretenimento SA and Planet Fitness, you can compare the effects of market volatilities on T4F Entretenimento 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 T4F Entretenimento with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of T4F Entretenimento and Planet Fitness.

Diversification Opportunities for T4F Entretenimento and Planet Fitness

-0.32

Correlation Coefficient

T4F Entretenimento  Planet Fitness

Very good diversification

The 3 months correlation between T4F and Planet is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding T4F Entretenimento SA and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and T4F Entretenimento 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 T4F Entretenimento SA 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 T4F Entretenimento i.e., T4F Entretenimento and Planet Fitness go up and down completely randomly.

Pair Corralation between T4F Entretenimento and Planet Fitness

Assuming the 90 days trading horizon T4F Entretenimento is expected to generate 1.2 times less return on investment than Planet Fitness. In addition to that, T4F Entretenimento is 3.85 times more volatile than Planet Fitness. It trades about 0.02 of its total potential returns per unit of risk. Planet Fitness is currently generating about 0.07 per unit of volatility. If you would invest  6,881  in Planet Fitness on April 13, 2025 and sell it today you would earn a total of  315.00  from holding Planet Fitness or generate 4.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

T4F Entretenimento SA  vs.  Planet Fitness

T4F Entretenimento

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in T4F Entretenimento SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, T4F Entretenimento is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Planet Fitness

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Planet Fitness is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with T4F Entretenimento and Planet Fitness

The main advantage of trading using opposite T4F Entretenimento and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T4F Entretenimento 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 T4F Entretenimento SA 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.