Correlation Between FAT Brands and El Pollo
Can any of the company-specific risk be diversified away by investing in both FAT Brands and El Pollo 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 El Pollo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and El Pollo Loco, you can compare the effects of market volatilities on FAT Brands and El Pollo 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 El Pollo. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and El Pollo.
Diversification Opportunities for FAT Brands and El Pollo
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FAT and LOCO is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and El Pollo Loco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Pollo Loco 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 El Pollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Pollo Loco has no effect on the direction of FAT Brands i.e., FAT Brands and El Pollo go up and down completely randomly.
Pair Corralation between FAT Brands and El Pollo
Assuming the 90 days horizon FAT Brands is expected to generate 2.39 times more return on investment than El Pollo. However, FAT Brands is 2.39 times more volatile than El Pollo Loco. It trades about 0.13 of its potential returns per unit of risk. El Pollo Loco is currently generating about -0.1 per unit of risk. If you would invest 442.00 in FAT Brands on October 26, 2024 and sell it today you would earn a total of 98.00 from holding FAT Brands or generate 22.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAT Brands vs. El Pollo Loco
Performance |
| Timeline |
| FAT Brands |
| El Pollo Loco |
FAT Brands and El Pollo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and El Pollo
The main advantage of trading using opposite FAT Brands and El Pollo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands position performs unexpectedly, El Pollo 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 El Pollo will offset losses from the drop in El Pollo's long position.| FAT Brands vs. FAT Brands | FAT Brands vs. Brinker International | FAT Brands vs. Jack In The | FAT Brands vs. Potbelly Co |
| El Pollo vs. FAT Brands | El Pollo vs. Potbelly Co | El Pollo vs. BJs Restaurants | El Pollo vs. One Group Hospitality |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |