Correlation Between Darden Restaurants and Six Flags
Can any of the company-specific risk be diversified away by investing in both Darden Restaurants and Six Flags 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 Darden Restaurants and Six Flags into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darden Restaurants and Six Flags Entertainment, you can compare the effects of market volatilities on Darden Restaurants and Six Flags 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 Darden Restaurants with a short position of Six Flags. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and Six Flags.
Diversification Opportunities for Darden Restaurants and Six Flags
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Darden and Six is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and Six Flags Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Flags Entertainment and Darden 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 Darden Restaurants are associated (or correlated) with Six Flags. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Flags Entertainment has no effect on the direction of Darden Restaurants i.e., Darden Restaurants and Six Flags go up and down completely randomly.
Pair Corralation between Darden Restaurants and Six Flags
Considering the 90-day investment horizon Darden Restaurants is expected to generate 0.66 times more return on investment than Six Flags. However, Darden Restaurants is 1.52 times less risky than Six Flags. It trades about 0.09 of its potential returns per unit of risk. Six Flags Entertainment is currently generating about 0.04 per unit of risk. If you would invest 14,779 in Darden Restaurants on September 3, 2024 and sell it today you would earn a total of 2,848 from holding Darden Restaurants or generate 19.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darden Restaurants vs. Six Flags Entertainment
Performance |
| Timeline |
| Darden Restaurants |
| Six Flags Entertainment |
Darden Restaurants and Six Flags Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darden Restaurants and Six Flags
The main advantage of trading using opposite Darden Restaurants and Six Flags positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darden Restaurants position performs unexpectedly, Six Flags 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 Six Flags will offset losses from the drop in Six Flags' long position.| Darden Restaurants vs. Highway Holdings Limited | Darden Restaurants vs. QCR Holdings | Darden Restaurants vs. Partner Communications | Darden Restaurants vs. Acumen Pharmaceuticals |
| Six Flags vs. Planet Fitness | Six Flags vs. Madison Square Garden | Six Flags vs. Mattel Inc | Six Flags vs. Johnson Outdoors |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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