Correlation Between BKV and 83001WAC8

Can any of the company-specific risk be diversified away by investing in both BKV and 83001WAC8 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 BKV and 83001WAC8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BKV Corporation and Six Flags Theme, you can compare the effects of market volatilities on BKV and 83001WAC8 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 BKV with a short position of 83001WAC8. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKV and 83001WAC8.

Diversification Opportunities for BKV and 83001WAC8

0.15

Correlation Coefficient

BKV  83001WAC8

Average diversification

The 3 months correlation between BKV and 83001WAC8 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. and Six Flags Theme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Flags Theme and BKV 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 BKV Corporation are associated (or correlated) with 83001WAC8. 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 Theme has no effect on the direction of BKV i.e., BKV and 83001WAC8 go up and down completely randomly.

Pair Corralation between BKV and 83001WAC8

Considering the 90-day investment horizon BKV is expected to generate 6.5 times less return on investment than 83001WAC8. But when comparing it to its historical volatility, BKV Corporation is 30.04 times less risky than 83001WAC8. It trades about 0.23 of its potential returns per unit of risk. Six Flags Theme is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  10,213  in Six Flags Theme on October 4, 2024 and sell it today you would lose (41.00) from holding Six Flags Theme or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	20.99%
Values	Daily Returns

BKV Corp.  vs.  Six Flags Theme

BKV Corporation

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Six Flags Theme

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Six Flags Theme are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 83001WAC8 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BKV and 83001WAC8

The main advantage of trading using opposite BKV and 83001WAC8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKV position performs unexpectedly, 83001WAC8 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 83001WAC8 will offset losses from the drop in 83001WAC8's long position.

The idea behind BKV Corporation and Six Flags Theme 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.