Correlation Between FAT Brands and Medalist Diversified
Can any of the company-specific risk be diversified away by investing in both FAT Brands and Medalist Diversified 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 Medalist Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Medalist Diversified Reit, you can compare the effects of market volatilities on FAT Brands and Medalist Diversified 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 Medalist Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Medalist Diversified.
Diversification Opportunities for FAT Brands and Medalist Diversified
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between FAT and Medalist is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Medalist Diversified Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medalist Diversified Reit 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 Medalist Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medalist Diversified Reit has no effect on the direction of FAT Brands i.e., FAT Brands and Medalist Diversified go up and down completely randomly.
Pair Corralation between FAT Brands and Medalist Diversified
Assuming the 90 days horizon FAT Brands is expected to generate 1.36 times less return on investment than Medalist Diversified. But when comparing it to its historical volatility, FAT Brands is 3.13 times less risky than Medalist Diversified. It trades about 0.29 of its potential returns per unit of risk. Medalist Diversified Reit is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,500 in Medalist Diversified Reit on August 31, 2024 and sell it today you would earn a total of 200.00 from holding Medalist Diversified Reit or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAT Brands vs. Medalist Diversified Reit
Performance |
| Timeline |
| FAT Brands |
| Medalist Diversified Reit |
FAT Brands and Medalist Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Medalist Diversified
The main advantage of trading using opposite FAT Brands and Medalist Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands position performs unexpectedly, Medalist Diversified 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 Medalist Diversified will offset losses from the drop in Medalist Diversified's long position.The idea behind FAT Brands and Medalist Diversified Reit pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Medalist Diversified vs. Medallion Bank PR | Medalist Diversified vs. Sotherly Hotels PR | Medalist Diversified vs. Healthcare Trust PR | Medalist Diversified vs. Sotherly Hotels Series |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |