Correlation Between Sapiens International and United Parks

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

By analyzing existing cross correlation between Sapiens International and United Parks Resorts, you can compare the effects of market volatilities on Sapiens International and United Parks 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 Sapiens International with a short position of United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapiens International and United Parks.

Diversification Opportunities for Sapiens International and United Parks

-0.74

Correlation Coefficient

Sapiens International  United Parks

Pay attention - limited upside

The 3 months correlation between Sapiens and United is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts and Sapiens International 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 Sapiens International are associated (or correlated) with United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Sapiens International i.e., Sapiens International and United Parks go up and down completely randomly.

Pair Corralation between Sapiens International and United Parks

Given the investment horizon of 90 days Sapiens International is expected to under-perform the United Parks. In addition to that, Sapiens International is 1.69 times more volatile than United Parks Resorts. It trades about -0.09 of its total potential returns per unit of risk. United Parks Resorts is currently generating about 0.05 per unit of volatility. If you would invest  5,105  in United Parks Resorts on September 22, 2024 and sell it today you would earn a total of  303.00  from holding United Parks Resorts or generate 5.94% return on investment over 90 days.

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

Sapiens International  vs.  United Parks Resorts

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

United Parks Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Parks Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, United Parks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sapiens International and United Parks

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

The idea behind Sapiens International and United Parks Resorts 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.