Correlation Between Malibu Boats and Cedar Fair

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

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

Diversification Opportunities for Malibu Boats and Cedar Fair

0.6

Correlation Coefficient

Malibu Boats  Cedar Fair

Poor diversification

The 3 months correlation between Malibu and Cedar is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats 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 Malibu Boats 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 Malibu Boats 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 Malibu Boats i.e., Malibu Boats and Cedar Fair go up and down completely randomly.

Pair Corralation between Malibu Boats and Cedar Fair

Given the investment horizon of 90 days Malibu Boats is expected to under-perform the Cedar Fair. In addition to that, Malibu Boats is 1.73 times more volatile than Cedar Fair LP. It trades about -0.42 of its total potential returns per unit of risk. Cedar Fair LP is currently generating about -0.08 per unit of volatility. If you would invest  4,075  in Cedar Fair LP on February 3, 2024 and sell it today you would lose (132.00) from holding Cedar Fair LP or give up 3.24% of portfolio value over 90 days.

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

Malibu Boats  vs.  Cedar Fair LP

Malibu Boats

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malibu Boats has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Malibu Boats and Cedar Fair

The main advantage of trading using opposite Malibu Boats and Cedar Fair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malibu Boats 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 Malibu Boats 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.