Correlation Between Nathans Famous and Good Times
Can any of the company-specific risk be diversified away by investing in both Nathans Famous and Good Times 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 Good Times into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nathans Famous and Good Times Restaurants, you can compare the effects of market volatilities on Nathans Famous and Good Times 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 Good Times. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nathans Famous and Good Times.
Diversification Opportunities for Nathans Famous and Good Times
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nathans and Good is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nathans Famous and Good Times Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Times Restaurants 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 Good Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Times Restaurants has no effect on the direction of Nathans Famous i.e., Nathans Famous and Good Times go up and down completely randomly.
Pair Corralation between Nathans Famous and Good Times
Given the investment horizon of 90 days Nathans Famous is expected to under-perform the Good Times. But the stock apears to be less risky and, when comparing its historical volatility, Nathans Famous is 1.72 times less risky than Good Times. The stock trades about -0.09 of its potential returns per unit of risk. The Good Times Restaurants is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 251.00 in Good Times Restaurants on October 21, 2024 and sell it today you would earn a total of 3.00 from holding Good Times Restaurants or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nathans Famous vs. Good Times Restaurants
Performance |
| Timeline |
| Nathans Famous |
| Good Times Restaurants |
Nathans Famous and Good Times Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nathans Famous and Good Times
The main advantage of trading using opposite Nathans Famous and Good Times positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nathans Famous position performs unexpectedly, Good Times 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 Good Times will offset losses from the drop in Good Times' long position.| Nathans Famous vs. Noble Romans | Nathans Famous vs. Good Times Restaurants | Nathans Famous vs. Bagger Daves Burger | Nathans Famous vs. Flanigans Enterprises |
| Good Times vs. Nathans Famous | Good Times vs. FAT Brands | Good Times vs. El Pollo Loco | Good Times vs. Ark Restaurants Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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