Correlation Between FAT Brands and Star Equity
Can any of the company-specific risk be diversified away by investing in both FAT Brands and Star Equity 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 Star Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Star Equity Holdings, you can compare the effects of market volatilities on FAT Brands and Star Equity 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 Star Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Star Equity.
Diversification Opportunities for FAT Brands and Star Equity
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FAT and Star is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Star Equity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Equity Holdings 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 Star Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Equity Holdings has no effect on the direction of FAT Brands i.e., FAT Brands and Star Equity go up and down completely randomly.
Pair Corralation between FAT Brands and Star Equity
Assuming the 90 days horizon FAT Brands is expected to generate 0.82 times more return on investment than Star Equity. However, FAT Brands is 1.22 times less risky than Star Equity. It trades about 0.3 of its potential returns per unit of risk. Star Equity Holdings is currently generating about 0.11 per unit of risk. If you would invest 941.00 in FAT Brands on September 1, 2024 and sell it today you would earn a total of 70.00 from holding FAT Brands or generate 7.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAT Brands vs. Star Equity Holdings
Performance |
| Timeline |
| FAT Brands |
| Star Equity Holdings |
FAT Brands and Star Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Star Equity
The main advantage of trading using opposite FAT Brands and Star Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands position performs unexpectedly, Star Equity 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 Star Equity will offset losses from the drop in Star Equity's long position.The idea behind FAT Brands and Star Equity Holdings 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.| Star Equity vs. Star Equity Holdings | Star Equity vs. XOMA Corp | Star Equity vs. Fundamental Global | Star Equity vs. Fortress Biotech Pref |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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