Correlation Between Flanigans Enterprises and FAT Brands
Can any of the company-specific risk be diversified away by investing in both Flanigans Enterprises 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 Flanigans Enterprises and FAT Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flanigans Enterprises and FAT Brands, you can compare the effects of market volatilities on Flanigans Enterprises 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 Flanigans Enterprises with a short position of FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flanigans Enterprises and FAT Brands.
Diversification Opportunities for Flanigans Enterprises and FAT Brands
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flanigans and FAT is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Flanigans Enterprises and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands and Flanigans Enterprises 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 Flanigans Enterprises 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 Flanigans Enterprises i.e., Flanigans Enterprises and FAT Brands go up and down completely randomly.
Pair Corralation between Flanigans Enterprises and FAT Brands
Considering the 90-day investment horizon Flanigans Enterprises is expected to generate 14.36 times less return on investment than FAT Brands. But when comparing it to its historical volatility, Flanigans Enterprises is 5.78 times less risky than FAT Brands. It trades about 0.07 of its potential returns per unit of risk. FAT Brands is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 313.00 in FAT Brands on November 18, 2024 and sell it today you would earn a total of 62.00 from holding FAT Brands or generate 19.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Flanigans Enterprises vs. FAT Brands
Performance |
| Timeline |
| Flanigans Enterprises |
| FAT Brands |
Flanigans Enterprises and FAT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flanigans Enterprises and FAT Brands
The main advantage of trading using opposite Flanigans Enterprises and FAT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flanigans Enterprises 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.| Flanigans Enterprises vs. FAT Brands | Flanigans Enterprises vs. Potbelly Co | Flanigans Enterprises vs. BJs Restaurants | Flanigans Enterprises vs. One Group Hospitality |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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