Correlation Between Allient and United Parks

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

By analyzing existing cross correlation between Allient and United Parks Resorts, you can compare the effects of market volatilities on Allient and United Parks 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 Allient with a short position of United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allient and United Parks.

Diversification Opportunities for Allient and United Parks

0.85

Correlation Coefficient

Allient  United Parks

Very poor diversification

The 3 months correlation between Allient and United is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Allient and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts and Allient 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 Allient are associated (or correlated) with United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Allient i.e., Allient and United Parks go up and down completely randomly.

Pair Corralation between Allient and United Parks

Given the investment horizon of 90 days Allient is expected to under-perform the United Parks. In addition to that, Allient is 1.37 times more volatile than United Parks Resorts. It trades about -0.16 of its total potential returns per unit of risk. United Parks Resorts is currently generating about 0.02 per unit of volatility. If you would invest  5,714  in United Parks Resorts on October 8, 2024 and sell it today you would earn a total of  25.00  from holding United Parks Resorts or generate 0.44% return on investment over 90 days.

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

Allient  vs.  United Parks Resorts

Allient

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

United Parks Resorts

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Parks Resorts are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward-looking signals, United Parks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allient and United Parks

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

The idea behind Allient and United Parks Resorts 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.