Correlation Between FAT Brands and Whole Earth
Can any of the company-specific risk be diversified away by investing in both FAT Brands and Whole Earth 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 Whole Earth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Whole Earth Brands, you can compare the effects of market volatilities on FAT Brands and Whole Earth 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 Whole Earth. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Whole Earth.
Diversification Opportunities for FAT Brands and Whole Earth
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between FAT and Whole is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Whole Earth Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whole Earth Brands 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 Whole Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whole Earth Brands has no effect on the direction of FAT Brands i.e., FAT Brands and Whole Earth go up and down completely randomly.
Pair Corralation between FAT Brands and Whole Earth
Assuming the 90 days horizon FAT Brands is expected to under-perform the Whole Earth. But the preferred stock apears to be less risky and, when comparing its historical volatility, FAT Brands is 63.38 times less risky than Whole Earth. The preferred stock trades about -0.07 of its potential returns per unit of risk. The Whole Earth Brands is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8.50 in Whole Earth Brands on August 28, 2024 and sell it today you would lose (8.50) from holding Whole Earth Brands or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 42.58% |
| Values | Daily Returns |
FAT Brands vs. Whole Earth Brands
Performance |
| Timeline |
| FAT Brands |
| Whole Earth Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FAT Brands and Whole Earth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Whole Earth
The main advantage of trading using opposite FAT Brands and Whole Earth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands position performs unexpectedly, Whole Earth 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 Whole Earth will offset losses from the drop in Whole Earth's long position.| FAT Brands vs. Fortress Biotech Pref | FAT Brands vs. FAT Brands | FAT Brands vs. Aquagold International | FAT Brands vs. Morningstar Unconstrained Allocation |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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