Correlation Between Cargojet and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both Cargojet 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 Cargojet and Restaurant Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cargojet and Restaurant Brands International, you can compare the effects of market volatilities on Cargojet 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 Cargojet with a short position of Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cargojet and Restaurant Brands.
Diversification Opportunities for Cargojet and Restaurant Brands
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cargojet and Restaurant is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cargojet and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands and Cargojet 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 Cargojet 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 Cargojet i.e., Cargojet and Restaurant Brands go up and down completely randomly.
Pair Corralation between Cargojet and Restaurant Brands
Assuming the 90 days trading horizon Cargojet is expected to generate 2.76 times less return on investment than Restaurant Brands. In addition to that, Cargojet is 1.64 times more volatile than Restaurant Brands International. It trades about 0.01 of its total potential returns per unit of risk. Restaurant Brands International is currently generating about 0.03 per unit of volatility. If you would invest 8,667 in Restaurant Brands International on August 30, 2024 and sell it today you would earn a total of 1,179 from holding Restaurant Brands International or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cargojet vs. Restaurant Brands Internationa
Performance |
| Timeline |
| Cargojet |
| Restaurant Brands |
Cargojet and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cargojet and Restaurant Brands
The main advantage of trading using opposite Cargojet and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cargojet 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.The idea behind Cargojet and Restaurant Brands International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Restaurant Brands vs. Canadian Tire | Restaurant Brands vs. Dollarama | Restaurant Brands vs. Nutrien | Restaurant Brands vs. Magna International |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |