Correlation Between Six Flags and 23291KAJ4

Can any of the company-specific risk be diversified away by investing in both Six Flags and 23291KAJ4 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 23291KAJ4 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 DH EUROPE FINANCE, you can compare the effects of market volatilities on Six Flags and 23291KAJ4 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 23291KAJ4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Six Flags and 23291KAJ4.

Diversification Opportunities for Six Flags and 23291KAJ4

-0.76

Correlation Coefficient

Six Flags  23291KAJ4

Pay attention - limited upside

The 3 months correlation between Six and 23291KAJ4 is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and DH EUROPE FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DH EUROPE FINANCE 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 23291KAJ4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DH EUROPE FINANCE has no effect on the direction of Six Flags i.e., Six Flags and 23291KAJ4 go up and down completely randomly.

Pair Corralation between Six Flags and 23291KAJ4

Considering the 90-day investment horizon Six Flags is expected to generate 40.54 times less return on investment than 23291KAJ4. But when comparing it to its historical volatility, Six Flags Entertainment is 25.21 times less risky than 23291KAJ4. It trades about 0.03 of its potential returns per unit of risk. DH EUROPE FINANCE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,279  in DH EUROPE FINANCE on October 5, 2024 and sell it today you would lose (325.00) from holding DH EUROPE FINANCE or give up 3.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.24%
Values	Daily Returns

Six Flags Entertainment  vs.  DH EUROPE FINANCE

Six Flags Entertainment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Six Flags Entertainment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Six Flags displayed solid returns over the last few months and may actually be approaching a breakup point.

DH EUROPE FINANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DH EUROPE FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 23291KAJ4 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Six Flags and 23291KAJ4

The main advantage of trading using opposite Six Flags and 23291KAJ4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Six Flags position performs unexpectedly, 23291KAJ4 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 23291KAJ4 will offset losses from the drop in 23291KAJ4's long position.

The idea behind Six Flags Entertainment and DH EUROPE FINANCE 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.