Correlation Between Ark Restaurants and United Parks
Can any of the company-specific risk be diversified away by investing in both Ark Restaurants 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 Ark Restaurants and United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ark Restaurants Corp and United Parks Resorts, you can compare the effects of market volatilities on Ark Restaurants 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 Ark Restaurants with a short position of United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and United Parks.
Diversification Opportunities for Ark Restaurants and United Parks
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ark and United is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp 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 Ark Restaurants 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 Ark Restaurants Corp 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 Ark Restaurants i.e., Ark Restaurants and United Parks go up and down completely randomly.
Pair Corralation between Ark Restaurants and United Parks
Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the United Parks. But the stock apears to be less risky and, when comparing its historical volatility, Ark Restaurants Corp is 1.44 times less risky than United Parks. The stock trades about -0.28 of its potential returns per unit of risk. The United Parks Resorts is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,490 in United Parks Resorts on August 30, 2024 and sell it today you would earn a total of 317.00 from holding United Parks Resorts or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ark Restaurants Corp vs. United Parks Resorts
Performance |
| Timeline |
| Ark Restaurants Corp |
| United Parks Resorts |
Ark Restaurants and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ark Restaurants and United Parks
The main advantage of trading using opposite Ark Restaurants and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Restaurants 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.| Ark Restaurants vs. Chipotle Mexican Grill | Ark Restaurants vs. Yum Brands | Ark Restaurants vs. The Wendys Co | Ark Restaurants vs. McDonalds |
| United Parks vs. Chipotle Mexican Grill | United Parks vs. Yum Brands | United Parks vs. The Wendys Co | United Parks vs. McDonalds |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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