Correlation Between Six Flags and Escalade Incorporated

Can any of the company-specific risk be diversified away by investing in both Six Flags and Escalade Incorporated 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 Escalade Incorporated 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 Escalade Incorporated, you can compare the effects of market volatilities on Six Flags and Escalade Incorporated 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 Escalade Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Six Flags and Escalade Incorporated.

Diversification Opportunities for Six Flags and Escalade Incorporated

-0.23

Correlation Coefficient

Six Flags  Escalade Incorporated

Very good diversification

The 3 months correlation between Six and Escalade is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and Escalade Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escalade Incorporated 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 Escalade Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Escalade Incorporated has no effect on the direction of Six Flags i.e., Six Flags and Escalade Incorporated go up and down completely randomly.

Pair Corralation between Six Flags and Escalade Incorporated

Considering the 90-day investment horizon Six Flags Entertainment is expected to under-perform the Escalade Incorporated. In addition to that, Six Flags is 1.18 times more volatile than Escalade Incorporated. It trades about -0.14 of its total potential returns per unit of risk. Escalade Incorporated is currently generating about 0.09 per unit of volatility. If you would invest  1,404  in Escalade Incorporated on December 28, 2024 and sell it today you would earn a total of  173.00  from holding Escalade Incorporated or generate 12.32% return on investment over 90 days.

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

Six Flags Entertainment  vs.  Escalade Incorporated

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.

Escalade Incorporated

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Escalade Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Escalade Incorporated sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Six Flags and Escalade Incorporated

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

The idea behind Six Flags Entertainment and Escalade Incorporated 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.