Correlation Between Six Flags and Xponential Fitness

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

Diversification Opportunities for Six Flags and Xponential Fitness

0.62

Correlation Coefficient

Six Flags  Xponential Fitness

Poor diversification

The 3 months correlation between Six and Xponential is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness 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 Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Six Flags i.e., Six Flags and Xponential Fitness go up and down completely randomly.

Pair Corralation between Six Flags and Xponential Fitness

Considering the 90-day investment horizon Six Flags Entertainment is expected to generate 0.41 times more return on investment than Xponential Fitness. However, Six Flags Entertainment is 2.46 times less risky than Xponential Fitness. It trades about -0.14 of its potential returns per unit of risk. Xponential Fitness is currently generating about -0.06 per unit of risk. If you would invest  4,826  in Six Flags Entertainment on December 29, 2024 and sell it today you would lose (1,116) from holding Six Flags Entertainment or give up 23.12% 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.  Xponential Fitness

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.

Xponential Fitness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xponential Fitness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Six Flags and Xponential Fitness

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

The idea behind Six Flags Entertainment and Xponential Fitness 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.