Correlation Between Flanigans Enterprises and Six Flags

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Can any of the company-specific risk be diversified away by investing in both Flanigans Enterprises and Six Flags 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 Flanigans Enterprises and Six Flags into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flanigans Enterprises and Six Flags Entertainment, you can compare the effects of market volatilities on Flanigans Enterprises and Six Flags 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 Flanigans Enterprises with a short position of Six Flags. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flanigans Enterprises and Six Flags.

Diversification Opportunities for Flanigans Enterprises and Six Flags

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Flanigans and Six is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Flanigans Enterprises and Six Flags Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Flags Entertainment and Flanigans Enterprises 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 Flanigans Enterprises are associated (or correlated) with Six Flags. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Flags Entertainment has no effect on the direction of Flanigans Enterprises i.e., Flanigans Enterprises and Six Flags go up and down completely randomly.

Pair Corralation between Flanigans Enterprises and Six Flags

Considering the 90-day investment horizon Flanigans Enterprises is expected to generate 23.87 times more return on investment than Six Flags. However, Flanigans Enterprises is 23.87 times more volatile than Six Flags Entertainment. It trades about 0.04 of its potential returns per unit of risk. Six Flags Entertainment is currently generating about 0.02 per unit of risk. If you would invest  2,600  in Flanigans Enterprises on October 24, 2024 and sell it today you would lose (104.00) from holding Flanigans Enterprises or give up 4.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.55%
ValuesDaily Returns

Flanigans Enterprises  vs.  Six Flags Entertainment

 Performance 
       Timeline  
Flanigans Enterprises 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
Six Flags Entertainment 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Six Flags Entertainment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Six Flags displayed solid returns over the last few months and may actually be approaching a breakup point.

Flanigans Enterprises and Six Flags Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Flanigans Enterprises and Six Flags

The main advantage of trading using opposite Flanigans Enterprises and Six Flags positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flanigans Enterprises position performs unexpectedly, Six Flags 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 Six Flags will offset losses from the drop in Six Flags' long position.
The idea behind Flanigans Enterprises and Six Flags Entertainment 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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