Correlation Between Smart Share and Arcos Dorados
Can any of the company-specific risk be diversified away by investing in both Smart Share and Arcos Dorados 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 Smart Share and Arcos Dorados into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Share Global and Arcos Dorados Holdings, you can compare the effects of market volatilities on Smart Share and Arcos Dorados 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 Smart Share with a short position of Arcos Dorados. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Share and Arcos Dorados.
Diversification Opportunities for Smart Share and Arcos Dorados
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smart and Arcos is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Smart Share Global and Arcos Dorados Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcos Dorados Holdings and Smart Share 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 Smart Share Global are associated (or correlated) with Arcos Dorados. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcos Dorados Holdings has no effect on the direction of Smart Share i.e., Smart Share and Arcos Dorados go up and down completely randomly.
Pair Corralation between Smart Share and Arcos Dorados
Allowing for the 90-day total investment horizon Smart Share Global is expected to generate 1.43 times more return on investment than Arcos Dorados. However, Smart Share is 1.43 times more volatile than Arcos Dorados Holdings. It trades about 0.34 of its potential returns per unit of risk. Arcos Dorados Holdings is currently generating about -0.11 per unit of risk. If you would invest 65.00 in Smart Share Global on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Smart Share Global or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Smart Share Global vs. Arcos Dorados Holdings
Performance |
| Timeline |
| Smart Share Global |
| Arcos Dorados Holdings |
Smart Share and Arcos Dorados Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Share and Arcos Dorados
The main advantage of trading using opposite Smart Share and Arcos Dorados positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Share position performs unexpectedly, Arcos Dorados 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 Arcos Dorados will offset losses from the drop in Arcos Dorados' long position.| Smart Share vs. Frontdoor | Smart Share vs. Bright Horizons Family | Smart Share vs. Mister Car Wash | Smart Share vs. Carriage Services |
| Arcos Dorados vs. BJs Restaurants | Arcos Dorados vs. Dine Brands Global | Arcos Dorados vs. Brinker International | Arcos Dorados vs. Bloomin Brands |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |