Correlation Between Noodles and Carrols Restaurant
Can any of the company-specific risk be diversified away by investing in both Noodles and Carrols Restaurant 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 Carrols Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noodles Company and Carrols Restaurant Group, you can compare the effects of market volatilities on Noodles and Carrols Restaurant 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 Carrols Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noodles and Carrols Restaurant.
Diversification Opportunities for Noodles and Carrols Restaurant
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Noodles and Carrols is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Noodles Company and Carrols Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrols Restaurant 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 Carrols Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrols Restaurant has no effect on the direction of Noodles i.e., Noodles and Carrols Restaurant go up and down completely randomly.
Pair Corralation between Noodles and Carrols Restaurant
If you would invest 546.00 in Carrols Restaurant Group on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Carrols Restaurant Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Noodles Company vs. Carrols Restaurant Group
Performance |
| Timeline |
| Noodles Company |
| Carrols Restaurant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Noodles and Carrols Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noodles and Carrols Restaurant
The main advantage of trading using opposite Noodles and Carrols Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noodles position performs unexpectedly, Carrols Restaurant 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 Carrols Restaurant will offset losses from the drop in Carrols Restaurant's long position.The idea behind Noodles Company and Carrols Restaurant Group 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.| Carrols Restaurant vs. FAT Brands | Carrols Restaurant vs. Potbelly Co | Carrols Restaurant vs. BJs Restaurants | Carrols Restaurant vs. One Group Hospitality |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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