Correlation Between Smart Share and FAT Brands
Can any of the company-specific risk be diversified away by investing in both Smart Share and FAT 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 Smart Share and FAT Brands 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 FAT Brands, you can compare the effects of market volatilities on Smart Share and FAT 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 Smart Share with a short position of FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Share and FAT Brands.
Diversification Opportunities for Smart Share and FAT Brands
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Smart and FAT is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Smart Share Global and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands 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 FAT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAT Brands has no effect on the direction of Smart Share i.e., Smart Share and FAT Brands go up and down completely randomly.
Pair Corralation between Smart Share and FAT Brands
Allowing for the 90-day total investment horizon Smart Share is expected to generate 2.37 times less return on investment than FAT Brands. But when comparing it to its historical volatility, Smart Share Global is 1.39 times less risky than FAT Brands. It trades about 0.04 of its potential returns per unit of risk. FAT Brands is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 446.00 in FAT Brands on September 5, 2024 and sell it today you would earn a total of 16.00 from holding FAT Brands or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart Share Global vs. FAT Brands
Performance |
| Timeline |
| Smart Share Global |
| FAT Brands |
Smart Share and FAT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Share and FAT Brands
The main advantage of trading using opposite Smart Share and FAT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Share position performs unexpectedly, FAT 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 FAT Brands will offset losses from the drop in FAT Brands' long position.| Smart Share vs. Frontdoor | Smart Share vs. Bright Horizons Family | Smart Share vs. Mister Car Wash | Smart Share vs. Carriage Services |
| FAT Brands vs. Hyatt Hotels | FAT Brands vs. Smart Share Global | FAT Brands vs. Sweetgreen | FAT Brands vs. Wyndham Hotels Resorts |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |