Correlation Between Six Flags and DXP Enterprises
Can any of the company-specific risk be diversified away by investing in both Six Flags and DXP Enterprises 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 DXP Enterprises 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 DXP Enterprises, you can compare the effects of market volatilities on Six Flags and DXP Enterprises 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 DXP Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Six Flags and DXP Enterprises.
Diversification Opportunities for Six Flags and DXP Enterprises
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Six and DXP is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and DXP Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXP Enterprises 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 DXP Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXP Enterprises has no effect on the direction of Six Flags i.e., Six Flags and DXP Enterprises go up and down completely randomly.
Pair Corralation between Six Flags and DXP Enterprises
Considering the 90-day investment horizon Six Flags Entertainment is expected to under-perform the DXP Enterprises. In addition to that, Six Flags is 1.26 times more volatile than DXP Enterprises. It trades about -0.01 of its total potential returns per unit of risk. DXP Enterprises is currently generating about 0.07 per unit of volatility. If you would invest 2,370 in DXP Enterprises on January 25, 2024 and sell it today you would earn a total of 2,786 from holding DXP Enterprises or generate 117.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Six Flags Entertainment vs. DXP Enterprises
Performance |
| Timeline |
| Six Flags Entertainment |
| DXP Enterprises |
Six Flags and DXP Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Six Flags and DXP Enterprises
The main advantage of trading using opposite Six Flags and DXP Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Six Flags position performs unexpectedly, DXP Enterprises 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 DXP Enterprises will offset losses from the drop in DXP Enterprises' long position.| Six Flags vs. JAKKS Pacific | Six Flags vs. OneSpaWorld Holdings | Six Flags vs. Clarus Corp | Six Flags vs. Cedar Fair LP |
| DXP Enterprises vs. Global Industrial Co | DXP Enterprises vs. EVI Industries | DXP Enterprises vs. Core Main | DXP Enterprises vs. Distribution Solutions Group |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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