Correlation Between Ark Restaurants and FAT Brands
Can any of the company-specific risk be diversified away by investing in both Ark Restaurants and FAT Brands 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 FAT Brands 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 FAT Brands, you can compare the effects of market volatilities on Ark Restaurants and FAT Brands 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 FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and FAT Brands.
Diversification Opportunities for Ark Restaurants and FAT Brands
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ark and FAT is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands 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 FAT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAT Brands has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and FAT Brands go up and down completely randomly.
Pair Corralation between Ark Restaurants and FAT Brands
Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the FAT Brands. But the stock apears to be less risky and, when comparing its historical volatility, Ark Restaurants Corp is 2.08 times less risky than FAT Brands. The stock trades about -0.32 of its potential returns per unit of risk. The FAT Brands is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 455.00 in FAT Brands on August 28, 2024 and sell it today you would lose (13.00) from holding FAT Brands or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ark Restaurants Corp vs. FAT Brands
Performance |
| Timeline |
| Ark Restaurants Corp |
| FAT Brands |
Ark Restaurants and FAT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ark Restaurants and FAT Brands
The main advantage of trading using opposite Ark Restaurants and FAT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Restaurants position performs unexpectedly, FAT Brands 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 FAT Brands will offset losses from the drop in FAT Brands' long position.| Ark Restaurants vs. Nathans Famous | Ark Restaurants vs. Flanigans Enterprises | Ark Restaurants vs. Good Times Restaurants | Ark Restaurants vs. Auburn National Bancorporation |
| FAT Brands vs. FAT Brands | FAT Brands vs. Brinker International | FAT Brands vs. Jack In The | FAT Brands vs. Potbelly Co |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |