Correlation Between Foot Locker and Red Robin
Can any of the company-specific risk be diversified away by investing in both Foot Locker and Red Robin 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 Foot Locker and Red Robin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and Red Robin Gourmet, you can compare the effects of market volatilities on Foot Locker and Red Robin 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 Foot Locker with a short position of Red Robin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and Red Robin.
Diversification Opportunities for Foot Locker and Red Robin
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Foot and Red is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and Red Robin Gourmet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Robin Gourmet and Foot Locker 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 Foot Locker are associated (or correlated) with Red Robin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Robin Gourmet has no effect on the direction of Foot Locker i.e., Foot Locker and Red Robin go up and down completely randomly.
Pair Corralation between Foot Locker and Red Robin
Allowing for the 90-day total investment horizon Foot Locker is expected to generate 0.94 times more return on investment than Red Robin. However, Foot Locker is 1.06 times less risky than Red Robin. It trades about 0.02 of its potential returns per unit of risk. Red Robin Gourmet is currently generating about -0.04 per unit of risk. If you would invest 2,560 in Foot Locker on August 31, 2024 and sell it today you would lose (45.00) from holding Foot Locker or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Foot Locker vs. Red Robin Gourmet
Performance |
| Timeline |
| Foot Locker |
| Red Robin Gourmet |
Foot Locker and Red Robin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and Red Robin
The main advantage of trading using opposite Foot Locker and Red Robin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, Red Robin 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 Red Robin will offset losses from the drop in Red Robin's long position.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
| Red Robin vs. Dine Brands Global | Red Robin vs. Bloomin Brands | Red Robin vs. BJs Restaurants | Red Robin vs. The Cheesecake Factory |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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