Correlation Between Johnson Outdoors and Six Flags
Can any of the company-specific risk be diversified away by investing in both Johnson Outdoors 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 Johnson Outdoors and Six Flags into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Outdoors and Six Flags Entertainment, you can compare the effects of market volatilities on Johnson Outdoors 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 Johnson Outdoors with a short position of Six Flags. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Outdoors and Six Flags.
Diversification Opportunities for Johnson Outdoors and Six Flags
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Johnson and Six is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Outdoors 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 Johnson Outdoors 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 Johnson Outdoors 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 Johnson Outdoors i.e., Johnson Outdoors and Six Flags go up and down completely randomly.
Pair Corralation between Johnson Outdoors and Six Flags
Given the investment horizon of 90 days Johnson Outdoors is expected to generate 3.23 times less return on investment than Six Flags. But when comparing it to its historical volatility, Johnson Outdoors is 1.21 times less risky than Six Flags. It trades about 0.07 of its potential returns per unit of risk. Six Flags Entertainment is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,211 in Six Flags Entertainment on August 27, 2024 and sell it today you would earn a total of 363.00 from holding Six Flags Entertainment or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Outdoors vs. Six Flags Entertainment
Performance |
| Timeline |
| Johnson Outdoors |
| Six Flags Entertainment |
Johnson Outdoors and Six Flags Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Outdoors and Six Flags
The main advantage of trading using opposite Johnson Outdoors and Six Flags positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Outdoors 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.| Johnson Outdoors vs. Vista Outdoor | Johnson Outdoors vs. Clarus Corp | Johnson Outdoors vs. Escalade Incorporated | Johnson Outdoors vs. JAKKS Pacific |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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