Correlation Between Bank of America and Fiesta Restaurant
Can any of the company-specific risk be diversified away by investing in both Bank of America and Fiesta Restaurant 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 Bank of America and Fiesta Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Fiesta Restaurant Group, you can compare the effects of market volatilities on Bank of America and Fiesta Restaurant 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 Bank of America with a short position of Fiesta Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Fiesta Restaurant.
Diversification Opportunities for Bank of America and Fiesta Restaurant
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Fiesta is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Fiesta Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiesta Restaurant and Bank of America 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 Bank of America are associated (or correlated) with Fiesta Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiesta Restaurant has no effect on the direction of Bank of America i.e., Bank of America and Fiesta Restaurant go up and down completely randomly.
Pair Corralation between Bank of America and Fiesta Restaurant
Considering the 90-day investment horizon Bank of America is expected to generate 2.28 times less return on investment than Fiesta Restaurant. But when comparing it to its historical volatility, Bank of America is 1.46 times less risky than Fiesta Restaurant. It trades about 0.05 of its potential returns per unit of risk. Fiesta Restaurant Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 618.00 in Fiesta Restaurant Group on August 24, 2024 and sell it today you would earn a total of 188.00 from holding Fiesta Restaurant Group or generate 30.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 32.06% |
| Values | Daily Returns |
Bank of America vs. Fiesta Restaurant Group
Performance |
| Timeline |
| Bank of America |
| Fiesta Restaurant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Fiesta Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Fiesta Restaurant
The main advantage of trading using opposite Bank of America and Fiesta Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Fiesta Restaurant 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 Fiesta Restaurant will offset losses from the drop in Fiesta Restaurant's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| Fiesta Restaurant vs. BJs Restaurants | Fiesta Restaurant vs. Dine Brands Global | Fiesta Restaurant vs. Brinker International | Fiesta Restaurant vs. FAT Brands |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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