Correlation Between Noodles and Vail Resorts
Can any of the company-specific risk be diversified away by investing in both Noodles and Vail Resorts 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 Noodles and Vail Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noodles Company and Vail Resorts, you can compare the effects of market volatilities on Noodles and Vail Resorts 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 Noodles with a short position of Vail Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noodles and Vail Resorts.
Diversification Opportunities for Noodles and Vail Resorts
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Noodles and Vail is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Noodles Company and Vail Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vail Resorts and Noodles 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 Noodles Company are associated (or correlated) with Vail Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vail Resorts has no effect on the direction of Noodles i.e., Noodles and Vail Resorts go up and down completely randomly.
Pair Corralation between Noodles and Vail Resorts
Given the investment horizon of 90 days Noodles Company is expected to generate 3.04 times more return on investment than Vail Resorts. However, Noodles is 3.04 times more volatile than Vail Resorts. It trades about -0.01 of its potential returns per unit of risk. Vail Resorts is currently generating about -0.03 per unit of risk. If you would invest 252.00 in Noodles Company on November 9, 2024 and sell it today you would lose (99.00) from holding Noodles Company or give up 39.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Noodles Company vs. Vail Resorts
Performance |
| Timeline |
| Noodles Company |
| Vail Resorts |
Noodles and Vail Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noodles and Vail Resorts
The main advantage of trading using opposite Noodles and Vail Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noodles position performs unexpectedly, Vail Resorts 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 Vail Resorts will offset losses from the drop in Vail Resorts' long position.The idea behind Noodles Company and Vail Resorts pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Vail Resorts vs. Marriot Vacations Worldwide | Vail Resorts vs. Monarch Casino Resort | Vail Resorts vs. Studio City International | Vail Resorts vs. Hilton Grand Vacations |
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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