Correlation Between FAT Brands and Fiesta Restaurant
Can any of the company-specific risk be diversified away by investing in both FAT Brands and Fiesta Restaurant 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 Fiesta Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Fiesta Restaurant Group, you can compare the effects of market volatilities on FAT Brands and Fiesta Restaurant 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 Fiesta Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Fiesta Restaurant.
Diversification Opportunities for FAT Brands and Fiesta Restaurant
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FAT and Fiesta is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Fiesta Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiesta Restaurant 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 Fiesta Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiesta Restaurant has no effect on the direction of FAT Brands i.e., FAT Brands and Fiesta Restaurant go up and down completely randomly.
Pair Corralation between FAT Brands and Fiesta Restaurant
Assuming the 90 days horizon FAT Brands is expected to generate 2.36 times less return on investment than Fiesta Restaurant. In addition to that, FAT Brands is 1.96 times more volatile than Fiesta Restaurant Group. It trades about 0.02 of its total potential returns per unit of risk. Fiesta Restaurant Group is currently generating about 0.08 per unit of volatility. If you would invest 627.00 in Fiesta Restaurant Group on August 27, 2024 and sell it today you would earn a total of 179.00 from holding Fiesta Restaurant Group or generate 28.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 31.85% |
| Values | Daily Returns |
FAT Brands vs. Fiesta Restaurant Group
Performance |
| Timeline |
| FAT Brands |
| Fiesta Restaurant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FAT Brands and Fiesta Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Fiesta Restaurant
The main advantage of trading using opposite FAT Brands and Fiesta Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands position performs unexpectedly, Fiesta Restaurant 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 Fiesta Restaurant will offset losses from the drop in Fiesta Restaurant's long position.| FAT Brands vs. FAT Brands | FAT Brands vs. Brinker International | FAT Brands vs. Jack In The | FAT Brands vs. Potbelly Co |
| Fiesta Restaurant vs. BJs Restaurants | Fiesta Restaurant vs. Dine Brands Global | Fiesta Restaurant vs. Brinker International | Fiesta Restaurant vs. FAT 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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