Correlation Between Nathans Famous and Bloomin Brands
Can any of the company-specific risk be diversified away by investing in both Nathans Famous and Bloomin 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 Nathans Famous and Bloomin Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nathans Famous and Bloomin Brands, you can compare the effects of market volatilities on Nathans Famous and Bloomin 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 Nathans Famous with a short position of Bloomin Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nathans Famous and Bloomin Brands.
Diversification Opportunities for Nathans Famous and Bloomin Brands
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nathans and Bloomin is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nathans Famous and Bloomin Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomin Brands and Nathans Famous 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 Nathans Famous are associated (or correlated) with Bloomin Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomin Brands has no effect on the direction of Nathans Famous i.e., Nathans Famous and Bloomin Brands go up and down completely randomly.
Pair Corralation between Nathans Famous and Bloomin Brands
Given the investment horizon of 90 days Nathans Famous is expected to generate 0.7 times more return on investment than Bloomin Brands. However, Nathans Famous is 1.43 times less risky than Bloomin Brands. It trades about 0.04 of its potential returns per unit of risk. Bloomin Brands is currently generating about -0.02 per unit of risk. If you would invest 6,576 in Nathans Famous on August 24, 2024 and sell it today you would earn a total of 1,855 from holding Nathans Famous or generate 28.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nathans Famous vs. Bloomin Brands
Performance |
| Timeline |
| Nathans Famous |
| Bloomin Brands |
Nathans Famous and Bloomin Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nathans Famous and Bloomin Brands
The main advantage of trading using opposite Nathans Famous and Bloomin Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nathans Famous position performs unexpectedly, Bloomin 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 Bloomin Brands will offset losses from the drop in Bloomin Brands' long position.| Nathans Famous vs. Bloomin Brands | Nathans Famous vs. BJs Restaurants | Nathans Famous vs. Darden Restaurants | Nathans Famous vs. Wingstop |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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