Correlation Between Chemours and United Parks

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

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

Diversification Opportunities for Chemours and United Parks

0.25

Correlation Coefficient

Chemours  United Parks

Modest diversification

The 3 months correlation between Chemours and United is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co 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 Chemours 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 Chemours Co 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 Chemours i.e., Chemours and United Parks go up and down completely randomly.

Pair Corralation between Chemours and United Parks

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the United Parks. In addition to that, Chemours is 2.1 times more volatile than United Parks Resorts. It trades about -0.19 of its total potential returns per unit of risk. United Parks Resorts is currently generating about 0.07 per unit of volatility. If you would invest  5,714  in United Parks Resorts on October 10, 2024 and sell it today you would earn a total of  111.00  from holding United Parks Resorts or generate 1.94% return on investment over 90 days.

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

Chemours Co  vs.  United Parks Resorts

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Chemours is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

United Parks Resorts

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Parks Resorts are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, United Parks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chemours and United Parks

The main advantage of trading using opposite Chemours and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours 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 Chemours Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.