Correlation Between Xponential Fitness and Six Flags

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

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

Diversification Opportunities for Xponential Fitness and Six Flags

0.72

Correlation Coefficient

Xponential Fitness  Six Flags

Poor diversification

The 3 months correlation between Xponential and Six is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Six Flags Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Flags Entertainment and Xponential Fitness 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 Xponential Fitness are associated (or correlated) with Six Flags. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Flags Entertainment has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and Six Flags go up and down completely randomly.

Pair Corralation between Xponential Fitness and Six Flags

Given the investment horizon of 90 days Xponential Fitness is expected to generate 2.14 times more return on investment than Six Flags. However, Xponential Fitness is 2.14 times more volatile than Six Flags Entertainment. It trades about 0.08 of its potential returns per unit of risk. Six Flags Entertainment is currently generating about 0.05 per unit of risk. If you would invest  1,292  in Xponential Fitness on August 30, 2024 and sell it today you would earn a total of  229.00  from holding Xponential Fitness or generate 17.72% return on investment over 90 days.

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

Xponential Fitness  vs.  Six Flags Entertainment

Xponential Fitness

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Xponential Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

Six Flags Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Six Flags Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Six Flags may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Xponential Fitness and Six Flags

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

The idea behind Xponential Fitness and Six Flags Entertainment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.