Correlation Between Cedar Fair and Playtech Plc

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

By analyzing existing cross correlation between Cedar Fair LP and Playtech plc, you can compare the effects of market volatilities on Cedar Fair and Playtech Plc 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 Cedar Fair with a short position of Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Fair and Playtech Plc.

Diversification Opportunities for Cedar Fair and Playtech Plc

-0.59

Correlation Coefficient

Cedar Fair  Playtech Plc

Excellent diversification

The 3 months correlation between Cedar and Playtech is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Fair LP and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc and Cedar Fair 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 Cedar Fair LP are associated (or correlated) with Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of Cedar Fair i.e., Cedar Fair and Playtech Plc go up and down completely randomly.

Pair Corralation between Cedar Fair and Playtech Plc

Considering the 90-day investment horizon Cedar Fair LP is expected to under-perform the Playtech Plc. In addition to that, Cedar Fair is 3.54 times more volatile than Playtech plc. It trades about -0.08 of its total potential returns per unit of risk. Playtech plc is currently generating about 0.21 per unit of volatility. If you would invest  565.00  in Playtech plc on February 3, 2024 and sell it today you would earn a total of  12.00  from holding Playtech plc or generate 2.12% return on investment over 90 days.

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

Cedar Fair LP  vs.  Playtech plc

Cedar Fair LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cedar Fair LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cedar Fair is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Playtech plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, Playtech Plc may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Cedar Fair and Playtech Plc

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

The idea behind Cedar Fair LP and Playtech plc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.