Correlation Between FAT Brands and Presidio Property
Can any of the company-specific risk be diversified away by investing in both FAT Brands and Presidio Property 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 Presidio Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Presidio Property Trust, you can compare the effects of market volatilities on FAT Brands and Presidio Property 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 Presidio Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Presidio Property.
Diversification Opportunities for FAT Brands and Presidio Property
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FAT and Presidio is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property Trust 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 Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of FAT Brands i.e., FAT Brands and Presidio Property go up and down completely randomly.
Pair Corralation between FAT Brands and Presidio Property
Assuming the 90 days horizon FAT Brands is expected to under-perform the Presidio Property. But the preferred stock apears to be less risky and, when comparing its historical volatility, FAT Brands is 1.33 times less risky than Presidio Property. The preferred stock trades about -0.07 of its potential returns per unit of risk. The Presidio Property Trust is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,514 in Presidio Property Trust on August 28, 2024 and sell it today you would lose (64.00) from holding Presidio Property Trust or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAT Brands vs. Presidio Property Trust
Performance |
| Timeline |
| FAT Brands |
| Presidio Property Trust |
FAT Brands and Presidio Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Presidio Property
The main advantage of trading using opposite FAT Brands and Presidio Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands position performs unexpectedly, Presidio Property 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 Presidio Property will offset losses from the drop in Presidio Property's long position.The idea behind FAT Brands and Presidio Property Trust 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.| Presidio Property vs. FAT Brands | Presidio Property vs. Atlanticus Holdings Corp | Presidio Property vs. Presidio Property Trust |
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 CEOs Directory module to screen CEOs from public companies around the world.
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