Correlation Between Origin Materials and United Parks

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Can any of the company-specific risk be diversified away by investing in both Origin Materials 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 Origin Materials and United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Materials and United Parks Resorts, you can compare the effects of market volatilities on Origin Materials 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 Origin Materials with a short position of United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and United Parks.

Diversification Opportunities for Origin Materials and United Parks

OriginUnitedDiversified AwayOriginUnitedDiversified Away100%
0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Origin and United is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials 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 Origin Materials 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 Origin Materials 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 Origin Materials i.e., Origin Materials and United Parks go up and down completely randomly.

Pair Corralation between Origin Materials and United Parks

Given the investment horizon of 90 days Origin Materials is expected to under-perform the United Parks. In addition to that, Origin Materials is 4.43 times more volatile than United Parks Resorts. It trades about -0.04 of its total potential returns per unit of risk. United Parks Resorts is currently generating about 0.02 per unit of volatility. If you would invest  5,217  in United Parks Resorts on November 27, 2024 and sell it today you would earn a total of  19.00  from holding United Parks Resorts or generate 0.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Origin Materials  vs.  United Parks Resorts

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010
JavaScript chart by amCharts 3.21.15ORGN PRKS
       Timeline  
Origin Materials 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Origin Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.80.911.11.21.3
United Parks Resorts 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days United Parks Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5254565860

Origin Materials and United Parks Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.62-6.46-4.29-2.13-0.03612.084.26.318.43 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15ORGN PRKS
       Returns  

Pair Trading with Origin Materials and United Parks

The main advantage of trading using opposite Origin Materials and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials 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.
The idea behind Origin Materials and United Parks Resorts 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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