Correlation Between Six Flags and Brunswick

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

Diversification Opportunities for Six Flags and Brunswick

-0.28

Correlation Coefficient

Six Flags  Brunswick

Very good diversification

The 3 months correlation between Six and Brunswick is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick 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 Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of Six Flags i.e., Six Flags and Brunswick go up and down completely randomly.

Pair Corralation between Six Flags and Brunswick

Considering the 90-day investment horizon Six Flags Entertainment is expected to generate 1.11 times more return on investment than Brunswick. However, Six Flags is 1.11 times more volatile than Brunswick. It trades about 0.09 of its potential returns per unit of risk. Brunswick is currently generating about -0.08 per unit of risk. If you would invest  4,152  in Six Flags Entertainment on September 17, 2024 and sell it today you would earn a total of  458.00  from holding Six Flags Entertainment or generate 11.03% 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.  Brunswick

Six Flags Entertainment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Six Flags Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Six Flags may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brunswick

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Six Flags and Brunswick

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

The idea behind Six Flags Entertainment and Brunswick 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.