Correlation Between Krispy Kreme and Portillos
Can any of the company-specific risk be diversified away by investing in both Krispy Kreme and Portillos 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 Portillos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krispy Kreme and Portillos, you can compare the effects of market volatilities on Krispy Kreme and Portillos 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 Portillos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krispy Kreme and Portillos.
Diversification Opportunities for Krispy Kreme and Portillos
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Krispy and Portillos is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos 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 Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of Krispy Kreme i.e., Krispy Kreme and Portillos go up and down completely randomly.
Pair Corralation between Krispy Kreme and Portillos
Given the investment horizon of 90 days Krispy Kreme is expected to under-perform the Portillos. But the stock apears to be less risky and, when comparing its historical volatility, Krispy Kreme is 1.62 times less risky than Portillos. The stock trades about -0.09 of its potential returns per unit of risk. The Portillos is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,198 in Portillos on November 2, 2024 and sell it today you would earn a total of 196.00 from holding Portillos or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krispy Kreme vs. Portillos
Performance |
| Timeline |
| Krispy Kreme |
| Portillos |
Krispy Kreme and Portillos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krispy Kreme and Portillos
The main advantage of trading using opposite Krispy Kreme and Portillos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krispy Kreme position performs unexpectedly, Portillos 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 Portillos will offset losses from the drop in Portillos' 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 |
| Portillos vs. Brinker International | Portillos vs. Bloomin Brands | Portillos vs. Wingstop | Portillos vs. Papa Johns 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |