Correlation Between Six Flags and Cedar Fair

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

Diversification Opportunities for Six Flags and Cedar Fair

0.89

Correlation Coefficient

Six Flags  Cedar Fair

Very poor diversification

The 3 months correlation between Six and Cedar is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and Cedar Fair LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Fair LP 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 Cedar Fair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Fair LP has no effect on the direction of Six Flags i.e., Six Flags and Cedar Fair go up and down completely randomly.

Pair Corralation between Six Flags and Cedar Fair

Considering the 90-day investment horizon Six Flags is expected to generate 1.41 times less return on investment than Cedar Fair. But when comparing it to its historical volatility, Six Flags Entertainment is 1.01 times less risky than Cedar Fair. It trades about 0.07 of its potential returns per unit of risk. Cedar Fair LP is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,138  in Cedar Fair LP on February 21, 2024 and sell it today you would earn a total of  308.00  from holding Cedar Fair LP or generate 7.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.67%
Values	Daily Returns

Six Flags Entertainment  vs.  Cedar Fair LP

Six Flags Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Six Flags Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Six Flags may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Cedar Fair LP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Fair LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Cedar Fair may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Six Flags and Cedar Fair

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

The idea behind Six Flags Entertainment and Cedar Fair LP 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.