Correlation Between Krispy Kreme and Ark Restaurants
Can any of the company-specific risk be diversified away by investing in both Krispy Kreme and Ark Restaurants 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 Krispy Kreme and Ark Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krispy Kreme and Ark Restaurants Corp, you can compare the effects of market volatilities on Krispy Kreme and Ark Restaurants 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 Krispy Kreme with a short position of Ark Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krispy Kreme and Ark Restaurants.
Diversification Opportunities for Krispy Kreme and Ark Restaurants
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Krispy and Ark is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants Corp and Krispy Kreme 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 Krispy Kreme are associated (or correlated) with Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of Krispy Kreme i.e., Krispy Kreme and Ark Restaurants go up and down completely randomly.
Pair Corralation between Krispy Kreme and Ark Restaurants
Given the investment horizon of 90 days Krispy Kreme is expected to under-perform the Ark Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, Krispy Kreme is 3.5 times less risky than Ark Restaurants. The stock trades about -0.31 of its potential returns per unit of risk. The Ark Restaurants Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,100 in Ark Restaurants Corp on October 25, 2024 and sell it today you would earn a total of 260.00 from holding Ark Restaurants Corp or generate 23.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krispy Kreme vs. Ark Restaurants Corp
Performance |
| Timeline |
| Krispy Kreme |
| Ark Restaurants Corp |
Krispy Kreme and Ark Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krispy Kreme and Ark Restaurants
The main advantage of trading using opposite Krispy Kreme and Ark Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krispy Kreme position performs unexpectedly, Ark Restaurants 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 Ark Restaurants will offset losses from the drop in Ark Restaurants' long position.| Krispy Kreme vs. Natural Grocers by | Krispy Kreme vs. Sprouts Farmers Market | Krispy Kreme vs. Albertsons Companies | Krispy Kreme vs. Ingles Markets Incorporated |
| Ark Restaurants vs. Nathans Famous | Ark Restaurants vs. Flanigans Enterprises | Ark Restaurants vs. Good Times Restaurants | Ark Restaurants vs. Auburn National Bancorporation |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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