Correlation Between Nathans Famous and ZA
Can any of the company-specific risk be diversified away by investing in both Nathans Famous and ZA 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 ZA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nathans Famous and ZA Group, you can compare the effects of market volatilities on Nathans Famous and ZA 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 ZA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nathans Famous and ZA.
Diversification Opportunities for Nathans Famous and ZA
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nathans and ZA is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nathans Famous and ZA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZA Group 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 ZA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZA Group has no effect on the direction of Nathans Famous i.e., Nathans Famous and ZA go up and down completely randomly.
Pair Corralation between Nathans Famous and ZA
Given the investment horizon of 90 days Nathans Famous is expected to generate 400.3 times less return on investment than ZA. But when comparing it to its historical volatility, Nathans Famous is 118.14 times less risky than ZA. It trades about 0.05 of its potential returns per unit of risk. ZA Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.01 in ZA Group on September 12, 2024 and sell it today you would lose (0.01) from holding ZA Group or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Nathans Famous vs. ZA Group
Performance |
| Timeline |
| Nathans Famous |
| ZA Group |
Nathans Famous and ZA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nathans Famous and ZA
The main advantage of trading using opposite Nathans Famous and ZA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nathans Famous position performs unexpectedly, ZA 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 ZA will offset losses from the drop in ZA's long position.| Nathans Famous vs. Noble Romans | Nathans Famous vs. Good Times Restaurants | Nathans Famous vs. Flanigans Enterprises | Nathans Famous vs. FAT Brands |
| ZA vs. Jollibee Foods Corp | ZA vs. Nathans Famous | ZA vs. Good Times Restaurants | ZA vs. Compass Group PLC |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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