Correlation Between CCL Industries and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both CCL Industries 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 CCL Industries and Restaurant Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Restaurant Brands International, you can compare the effects of market volatilities on CCL Industries 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 CCL Industries with a short position of Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Restaurant Brands.
Diversification Opportunities for CCL Industries and Restaurant Brands
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CCL and Restaurant is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands and CCL Industries 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 CCL Industries 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 CCL Industries i.e., CCL Industries and Restaurant Brands go up and down completely randomly.
Pair Corralation between CCL Industries and Restaurant Brands
Assuming the 90 days trading horizon CCL Industries is expected to under-perform the Restaurant Brands. In addition to that, CCL Industries is 1.4 times more volatile than Restaurant Brands International. It trades about -0.23 of its total potential returns per unit of risk. Restaurant Brands International is currently generating about -0.05 per unit of volatility. If you would invest 9,850 in Restaurant Brands International on September 3, 2024 and sell it today you would lose (119.00) from holding Restaurant Brands International or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CCL Industries vs. Restaurant Brands Internationa
Performance |
| Timeline |
| CCL Industries |
| Restaurant Brands |
CCL Industries and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and Restaurant Brands
The main advantage of trading using opposite CCL Industries and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries 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.| CCL Industries vs. CCL Industries | CCL Industries vs. Quebecor | CCL Industries vs. Winpak | CCL Industries vs. Restaurant Brands International |
| Restaurant Brands vs. High Liner Foods | Restaurant Brands vs. Richelieu Hardware | Restaurant Brands vs. International Zeolite Corp | Restaurant Brands vs. European Residential Real |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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