Correlation Between Plby and SeaWorld Entertainment

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

By analyzing existing cross correlation between Plby Group and SeaWorld Entertainment, you can compare the effects of market volatilities on Plby and SeaWorld Entertainment 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 Plby with a short position of SeaWorld Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plby and SeaWorld Entertainment.

Diversification Opportunities for Plby and SeaWorld Entertainment

-0.08

Correlation Coefficient

Plby  SeaWorld Entertainment

Good diversification

The 3 months correlation between Plby and SeaWorld is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Plby Group and SeaWorld Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SeaWorld Entertainment and Plby 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 Plby Group are associated (or correlated) with SeaWorld Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SeaWorld Entertainment has no effect on the direction of Plby i.e., Plby and SeaWorld Entertainment go up and down completely randomly.

Pair Corralation between Plby and SeaWorld Entertainment

If you would invest  61.00  in Plby Group on September 12, 2024 and sell it today you would earn a total of  95.50  from holding Plby Group or generate 156.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Plby Group  vs.  SeaWorld Entertainment

Plby Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plby Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Plby showed solid returns over the last few months and may actually be approaching a breakup point.

SeaWorld Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SeaWorld Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SeaWorld Entertainment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Plby and SeaWorld Entertainment

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

The idea behind Plby Group and SeaWorld Entertainment 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 Global Correlations module to find global opportunities by holding instruments from different markets.