Correlation Between Inspired Entertainment and United Parks

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

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

Diversification Opportunities for Inspired Entertainment and United Parks

-0.38

Correlation Coefficient

Inspired Entertainment  United Parks

Very good diversification

The 3 months correlation between Inspired and United is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Inspired Entertainment 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 Inspired Entertainment 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 Inspired Entertainment 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 Inspired Entertainment i.e., Inspired Entertainment and United Parks go up and down completely randomly.

Pair Corralation between Inspired Entertainment and United Parks

Given the investment horizon of 90 days Inspired Entertainment is expected to under-perform the United Parks. In addition to that, Inspired Entertainment is 1.34 times more volatile than United Parks Resorts. It trades about 0.0 of its total potential returns per unit of risk. United Parks Resorts is currently generating about 0.0 per unit of volatility. If you would invest  5,728  in United Parks Resorts on December 2, 2024 and sell it today you would lose (678.00) from holding United Parks Resorts or give up 11.84% of portfolio value over 90 days.

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

Inspired Entertainment  vs.  United Parks Resorts

Inspired Entertainment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inspired Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Inspired Entertainment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

United Parks Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Parks Resorts 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 forward-looking signals 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 Inspired Entertainment and United Parks

The main advantage of trading using opposite Inspired Entertainment and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspired Entertainment 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 Inspired Entertainment 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.