Correlation Between Six Flags and Marine Products

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

Diversification Opportunities for Six Flags and Marine Products

-0.19

Correlation Coefficient

Six Flags  Marine Products

Good diversification

The 3 months correlation between Six and Marine is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Six Flags i.e., Six Flags and Marine Products go up and down completely randomly.

Pair Corralation between Six Flags and Marine Products

Considering the 90-day investment horizon Six Flags is expected to generate 2.2 times less return on investment than Marine Products. In addition to that, Six Flags is 1.11 times more volatile than Marine Products. It trades about 0.01 of its total potential returns per unit of risk. Marine Products is currently generating about 0.02 per unit of volatility. If you would invest  1,053  in Marine Products on February 3, 2024 and sell it today you would earn a total of  85.00  from holding Marine Products or generate 8.07% return on investment over 90 days.

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

Six Flags Entertainment  vs.  Marine Products

Six Flags Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Six Flags Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Six Flags is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Marine Products

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marine Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Marine Products showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Six Flags and Marine Products

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

The idea behind Six Flags Entertainment and Marine Products 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.