Correlation Between El Pollo and Smart Share
Can any of the company-specific risk be diversified away by investing in both El Pollo and Smart Share 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 El Pollo and Smart Share into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Pollo Loco and Smart Share Global, you can compare the effects of market volatilities on El Pollo and Smart Share 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 El Pollo with a short position of Smart Share. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Pollo and Smart Share.
Diversification Opportunities for El Pollo and Smart Share
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LOCO and Smart is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding El Pollo Loco and Smart Share Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Share Global and El Pollo 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 El Pollo Loco are associated (or correlated) with Smart Share. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Share Global has no effect on the direction of El Pollo i.e., El Pollo and Smart Share go up and down completely randomly.
Pair Corralation between El Pollo and Smart Share
Given the investment horizon of 90 days El Pollo Loco is expected to generate 0.45 times more return on investment than Smart Share. However, El Pollo Loco is 2.22 times less risky than Smart Share. It trades about 0.01 of its potential returns per unit of risk. Smart Share Global is currently generating about 0.0 per unit of risk. If you would invest 1,269 in El Pollo Loco on August 27, 2024 and sell it today you would lose (39.00) from holding El Pollo Loco or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Pollo Loco vs. Smart Share Global
Performance |
| Timeline |
| El Pollo Loco |
| Smart Share Global |
El Pollo and Smart Share Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Pollo and Smart Share
The main advantage of trading using opposite El Pollo and Smart Share positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Pollo position performs unexpectedly, Smart Share 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 Smart Share will offset losses from the drop in Smart Share's long position.| El Pollo vs. FAT Brands | El Pollo vs. Potbelly Co | El Pollo vs. BJs Restaurants | El Pollo vs. One Group Hospitality |
| Smart Share vs. Frontdoor | Smart Share vs. Bright Horizons Family | Smart Share vs. Mister Car Wash | Smart Share vs. Carriage Services |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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