Correlation Between GEN Restaurant and FAT Brands
Can any of the company-specific risk be diversified away by investing in both GEN Restaurant and FAT Brands 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 GEN Restaurant and FAT Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEN Restaurant Group, and FAT Brands, you can compare the effects of market volatilities on GEN Restaurant and FAT Brands 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 GEN Restaurant with a short position of FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and FAT Brands.
Diversification Opportunities for GEN Restaurant and FAT Brands
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GEN and FAT is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands and GEN Restaurant 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 GEN Restaurant Group, are associated (or correlated) with FAT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAT Brands has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and FAT Brands go up and down completely randomly.
Pair Corralation between GEN Restaurant and FAT Brands
Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the FAT Brands. But the stock apears to be less risky and, when comparing its historical volatility, GEN Restaurant Group, is 4.49 times less risky than FAT Brands. The stock trades about -0.55 of its potential returns per unit of risk. The FAT Brands is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 317.00 in FAT Brands on November 5, 2024 and sell it today you would earn a total of 113.00 from holding FAT Brands or generate 35.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEN Restaurant Group, vs. FAT Brands
Performance |
| Timeline |
| GEN Restaurant Group, |
| FAT Brands |
GEN Restaurant and FAT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEN Restaurant and FAT Brands
The main advantage of trading using opposite GEN Restaurant and FAT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEN Restaurant position performs unexpectedly, FAT Brands 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 FAT Brands will offset losses from the drop in FAT Brands' long position.| GEN Restaurant vs. Sonos Inc | GEN Restaurant vs. Eltek | GEN Restaurant vs. Coda Octopus Group | GEN Restaurant vs. Mako Mining Corp |
| FAT Brands vs. FAT Brands | FAT Brands vs. Brinker International | FAT Brands vs. Jack In The | FAT Brands vs. Potbelly Co |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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