Correlation Between YETI Holdings and SeaWorld Entertainment

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

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

Diversification Opportunities for YETI Holdings and SeaWorld Entertainment

0.02

Correlation Coefficient

YETI Holdings  SeaWorld Entertainment

Significant diversification

The 3 months correlation between YETI and SeaWorld is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding YETI Holdings and SeaWorld Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SeaWorld Entertainment and YETI Holdings 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 YETI Holdings 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 YETI Holdings i.e., YETI Holdings and SeaWorld Entertainment go up and down completely randomly.

Pair Corralation between YETI Holdings and SeaWorld Entertainment

If you would invest  3,910  in YETI Holdings on August 31, 2024 and sell it today you would earn a total of  128.00  from holding YETI Holdings or generate 3.27% return on investment over 90 days.

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

YETI Holdings  vs.  SeaWorld Entertainment

YETI Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YETI Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, YETI Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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 YETI Holdings and SeaWorld Entertainment

The main advantage of trading using opposite YETI Holdings and SeaWorld Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YETI Holdings 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 YETI Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.