Correlation Between FAT Brands and Chuys Holdings
Can any of the company-specific risk be diversified away by investing in both FAT Brands and Chuys Holdings 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 FAT Brands and Chuys Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Chuys Holdings, you can compare the effects of market volatilities on FAT Brands and Chuys Holdings 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 FAT Brands with a short position of Chuys Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Chuys Holdings.
Diversification Opportunities for FAT Brands and Chuys Holdings
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FAT and Chuys is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Chuys Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuys Holdings and FAT Brands 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 FAT Brands are associated (or correlated) with Chuys Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuys Holdings has no effect on the direction of FAT Brands i.e., FAT Brands and Chuys Holdings go up and down completely randomly.
Pair Corralation between FAT Brands and Chuys Holdings
Assuming the 90 days horizon FAT Brands is expected to generate 1.14 times less return on investment than Chuys Holdings. In addition to that, FAT Brands is 1.59 times more volatile than Chuys Holdings. It trades about 0.02 of its total potential returns per unit of risk. Chuys Holdings is currently generating about 0.03 per unit of volatility. If you would invest 3,033 in Chuys Holdings on August 24, 2024 and sell it today you would earn a total of 715.00 from holding Chuys Holdings or generate 23.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.14% |
| Values | Daily Returns |
FAT Brands vs. Chuys Holdings
Performance |
| Timeline |
| FAT Brands |
| Chuys Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
FAT Brands and Chuys Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Chuys Holdings
The main advantage of trading using opposite FAT Brands and Chuys Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands position performs unexpectedly, Chuys Holdings 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 Chuys Holdings will offset losses from the drop in Chuys Holdings' long position.| FAT Brands vs. FAT Brands | FAT Brands vs. Brinker International | FAT Brands vs. Jack In The | FAT Brands vs. Potbelly Co |
| Chuys Holdings vs. Brinker International | Chuys Holdings vs. Bloomin Brands | Chuys Holdings vs. FAT Brands | Chuys Holdings vs. Potbelly Co |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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