Correlation Between BT Brands and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both BT Brands and Restaurant 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 BT Brands and Restaurant Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BT Brands Warrant and Restaurant Brands International, you can compare the effects of market volatilities on BT Brands and Restaurant 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 BT Brands with a short position of Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of BT Brands and Restaurant Brands.
Diversification Opportunities for BT Brands and Restaurant Brands
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BTBDW and Restaurant is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding BT Brands Warrant and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands and BT Brands 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 BT Brands Warrant are associated (or correlated) with Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of BT Brands i.e., BT Brands and Restaurant Brands go up and down completely randomly.
Pair Corralation between BT Brands and Restaurant Brands
Assuming the 90 days horizon BT Brands Warrant is expected to generate 178.39 times more return on investment than Restaurant Brands. However, BT Brands is 178.39 times more volatile than Restaurant Brands International. It trades about 0.24 of its potential returns per unit of risk. Restaurant Brands International is currently generating about 0.04 per unit of risk. If you would invest 11.00 in BT Brands Warrant on August 24, 2024 and sell it today you would lose (1.56) from holding BT Brands Warrant or give up 14.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 49.6% |
| Values | Daily Returns |
BT Brands Warrant vs. Restaurant Brands Internationa
Performance |
| Timeline |
| BT Brands Warrant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Restaurant Brands |
BT Brands and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BT Brands and Restaurant Brands
The main advantage of trading using opposite BT Brands and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BT Brands position performs unexpectedly, Restaurant 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.| BT Brands vs. Bloomin Brands | BT Brands vs. BJs Restaurants | BT Brands vs. Darden Restaurants | BT Brands vs. Wingstop |
| Restaurant Brands vs. Yum Brands | Restaurant Brands vs. Papa Johns International | Restaurant Brands vs. Jack In The | Restaurant Brands vs. Dominos Pizza |
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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