Correlation Between Portillos and Vail Resorts

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

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

Diversification Opportunities for Portillos and Vail Resorts

-0.82

Correlation Coefficient

Portillos  Vail Resorts

Pay attention - limited upside

The 3 months correlation between Portillos and Vail is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Portillos and Vail Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vail Resorts and Portillos 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 Portillos are associated (or correlated) with Vail Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vail Resorts has no effect on the direction of Portillos i.e., Portillos and Vail Resorts go up and down completely randomly.

Pair Corralation between Portillos and Vail Resorts

Given the investment horizon of 90 days Portillos is expected to under-perform the Vail Resorts. In addition to that, Portillos is 1.09 times more volatile than Vail Resorts. It trades about -0.25 of its total potential returns per unit of risk. Vail Resorts is currently generating about -0.18 per unit of volatility. If you would invest  18,963  in Vail Resorts on October 5, 2024 and sell it today you would lose (1,447) from holding Vail Resorts or give up 7.63% of portfolio value over 90 days.

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

Portillos  vs.  Vail Resorts

Portillos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Portillos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vail Resorts

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vail Resorts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vail Resorts is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Portillos and Vail Resorts

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

The idea behind Portillos and Vail 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.