Correlation Between United Parks and Lifezone Metals

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

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

Diversification Opportunities for United Parks and Lifezone Metals

0.63

Correlation Coefficient

United Parks  Lifezone Metals

Poor diversification

The 3 months correlation between United and Lifezone is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding United Parks Resorts and Lifezone Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifezone Metals and United Parks 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 United Parks Resorts are associated (or correlated) with Lifezone Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifezone Metals has no effect on the direction of United Parks i.e., United Parks and Lifezone Metals go up and down completely randomly.

Pair Corralation between United Parks and Lifezone Metals

Given the investment horizon of 90 days United Parks Resorts is expected to under-perform the Lifezone Metals. But the stock apears to be less risky and, when comparing its historical volatility, United Parks Resorts is 1.03 times less risky than Lifezone Metals. The stock trades about -0.11 of its potential returns per unit of risk. The Lifezone Metals Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  653.00  in Lifezone Metals Limited on October 23, 2024 and sell it today you would earn a total of  1.00  from holding Lifezone Metals Limited or generate 0.15% return on investment over 90 days.

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

United Parks Resorts  vs.  Lifezone Metals Limited

United Parks Resorts

Risk-Adjusted Performance

0 of 100

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 comparatively stable forward-looking signals, United Parks is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Lifezone Metals

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lifezone Metals Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Lifezone Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with United Parks and Lifezone Metals

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

The idea behind United Parks Resorts and Lifezone Metals Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.