Correlation Between Mohawk Industries and United Parks
Can any of the company-specific risk be diversified away by investing in both Mohawk Industries 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 Mohawk Industries and United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mohawk Industries and United Parks Resorts, you can compare the effects of market volatilities on Mohawk Industries 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 Mohawk Industries with a short position of United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mohawk Industries and United Parks.
Diversification Opportunities for Mohawk Industries and United Parks
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mohawk and United is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mohawk Industries 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 Mohawk Industries 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 Mohawk Industries 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 Mohawk Industries i.e., Mohawk Industries and United Parks go up and down completely randomly.
Pair Corralation between Mohawk Industries and United Parks
Considering the 90-day investment horizon Mohawk Industries is expected to generate 1.14 times less return on investment than United Parks. But when comparing it to its historical volatility, Mohawk Industries is 1.09 times less risky than United Parks. It trades about 0.11 of its potential returns per unit of risk. 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mohawk Industries vs. United Parks Resorts
Performance |
| Timeline |
| Mohawk Industries |
| United Parks Resorts |
Mohawk Industries and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mohawk Industries and United Parks
The main advantage of trading using opposite Mohawk Industries and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mohawk Industries 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.| Mohawk Industries vs. Bassett Furniture Industries | Mohawk Industries vs. Ethan Allen Interiors | Mohawk Industries vs. Natuzzi SpA | Mohawk Industries vs. Flexsteel Industries |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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