Correlation Between Six Flags and American Outdoor

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

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

Diversification Opportunities for Six Flags and American Outdoor

0.67

Correlation Coefficient

Six Flags  American Outdoor

Poor diversification

The 3 months correlation between Six and American is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and American Outdoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Outdoor Brands and Six Flags 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 Six Flags Entertainment are associated (or correlated) with American Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Outdoor Brands has no effect on the direction of Six Flags i.e., Six Flags and American Outdoor go up and down completely randomly.

Pair Corralation between Six Flags and American Outdoor

Considering the 90-day investment horizon Six Flags Entertainment is expected to under-perform the American Outdoor. But the stock apears to be less risky and, when comparing its historical volatility, Six Flags Entertainment is 1.25 times less risky than American Outdoor. The stock trades about -0.14 of its potential returns per unit of risk. The American Outdoor Brands is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,491  in American Outdoor Brands on December 28, 2024 and sell it today you would lose (225.00) from holding American Outdoor Brands or give up 15.09% of portfolio value over 90 days.

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

Six Flags Entertainment  vs.  American Outdoor Brands

Six Flags Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Six Flags Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

American Outdoor Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Outdoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Six Flags and American Outdoor

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

The idea behind Six Flags Entertainment and American Outdoor Brands 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..