Correlation Between A W and Keg Royalties
Can any of the company-specific risk be diversified away by investing in both A W and Keg Royalties 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 A W and Keg Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A W FOOD and The Keg Royalties, you can compare the effects of market volatilities on A W and Keg Royalties 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 A W with a short position of Keg Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of A W and Keg Royalties.
Diversification Opportunities for A W and Keg Royalties
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between A W and Keg is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding A W FOOD and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties and A W 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 A W FOOD are associated (or correlated) with Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of A W i.e., A W and Keg Royalties go up and down completely randomly.
Pair Corralation between A W and Keg Royalties
Assuming the 90 days horizon A W FOOD is expected to generate 0.79 times more return on investment than Keg Royalties. However, A W FOOD is 1.27 times less risky than Keg Royalties. It trades about -0.06 of its potential returns per unit of risk. The Keg Royalties is currently generating about -0.15 per unit of risk. If you would invest 3,725 in A W FOOD on August 31, 2024 and sell it today you would lose (30.00) from holding A W FOOD or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
A W FOOD vs. The Keg Royalties
Performance |
| Timeline |
| A W FOOD |
| Keg Royalties |
A W and Keg Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A W and Keg Royalties
The main advantage of trading using opposite A W and Keg Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A W position performs unexpectedly, Keg Royalties 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 Keg Royalties will offset losses from the drop in Keg Royalties' long position.| A W vs. Restaurant Brands International | A W vs. MTY Food Group | A W vs. Boston Pizza Royalties | A W vs. The Keg Royalties |
| Keg Royalties vs. Boston Pizza Royalties | Keg Royalties vs. SIR Royalty Income | Keg Royalties vs. Pizza Pizza Royalty | Keg Royalties vs. Chemtrade Logistics Income |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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