Correlation Between BTU Metals and United Parks

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

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

Diversification Opportunities for BTU Metals and United Parks

0.47

Correlation Coefficient

BTU Metals  United Parks

Very weak diversification

The 3 months correlation between BTU and United is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp 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 BTU Metals 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 BTU Metals Corp 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 BTU Metals i.e., BTU Metals and United Parks go up and down completely randomly.

Pair Corralation between BTU Metals and United Parks

Assuming the 90 days horizon BTU Metals Corp is expected to generate 1.67 times more return on investment than United Parks. However, BTU Metals is 1.67 times more volatile than United Parks Resorts. It trades about 0.23 of its potential returns per unit of risk. United Parks Resorts is currently generating about -0.11 per unit of risk. If you would invest  1.79  in BTU Metals Corp on October 23, 2024 and sell it today you would earn a total of  0.21  from holding BTU Metals Corp or generate 11.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

BTU Metals Corp  vs.  United Parks Resorts

BTU Metals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BTU Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, BTU Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

United Parks Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Parks Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, United Parks is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BTU Metals and United Parks

The main advantage of trading using opposite BTU Metals and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals 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 BTU Metals Corp 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.