Correlation Between Flex and Dave Busters
Can any of the company-specific risk be diversified away by investing in both Flex and Dave Busters 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 Flex and Dave Busters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flex and Dave Busters Entertainment, you can compare the effects of market volatilities on Flex and Dave Busters 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 Flex with a short position of Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flex and Dave Busters.
Diversification Opportunities for Flex and Dave Busters
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flex and Dave is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Flex and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta and Flex 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 Flex are associated (or correlated) with Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of Flex i.e., Flex and Dave Busters go up and down completely randomly.
Pair Corralation between Flex and Dave Busters
Given the investment horizon of 90 days Flex is expected to generate 0.71 times more return on investment than Dave Busters. However, Flex is 1.4 times less risky than Dave Busters. It trades about 0.22 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about 0.1 per unit of risk. If you would invest 3,467 in Flex on September 1, 2024 and sell it today you would earn a total of 430.00 from holding Flex or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flex vs. Dave Busters Entertainment
Performance |
| Timeline |
| Flex |
| Dave Busters Enterta |
Flex and Dave Busters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flex and Dave Busters
The main advantage of trading using opposite Flex and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex position performs unexpectedly, Dave Busters 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 Dave Busters will offset losses from the drop in Dave Busters' long position.The idea behind Flex and Dave Busters Entertainment 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.| Dave Busters vs. The Wendys Co | Dave Busters vs. Shake Shack | Dave Busters vs. Papa Johns International | Dave Busters vs. Darden Restaurants |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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