Correlation Between New Momentum and Fiesta Restaurant
Can any of the company-specific risk be diversified away by investing in both New Momentum and Fiesta 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 New Momentum and Fiesta Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Momentum and Fiesta Restaurant Group, you can compare the effects of market volatilities on New Momentum and Fiesta 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 New Momentum with a short position of Fiesta Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Momentum and Fiesta Restaurant.
Diversification Opportunities for New Momentum and Fiesta Restaurant
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Fiesta is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding New Momentum and Fiesta Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiesta Restaurant and New Momentum 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 New Momentum are associated (or correlated) with Fiesta Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiesta Restaurant has no effect on the direction of New Momentum i.e., New Momentum and Fiesta Restaurant go up and down completely randomly.
Pair Corralation between New Momentum and Fiesta Restaurant
Given the investment horizon of 90 days New Momentum is expected to generate 7.07 times more return on investment than Fiesta Restaurant. However, New Momentum is 7.07 times more volatile than Fiesta Restaurant Group. It trades about 0.03 of its potential returns per unit of risk. Fiesta Restaurant Group is currently generating about 0.08 per unit of risk. If you would invest 1.30 in New Momentum on August 24, 2024 and sell it today you would lose (1.25) from holding New Momentum or give up 96.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.99% |
| Values | Daily Returns |
New Momentum vs. Fiesta Restaurant Group
Performance |
| Timeline |
| New Momentum |
| Fiesta Restaurant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
New Momentum and Fiesta Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Momentum and Fiesta Restaurant
The main advantage of trading using opposite New Momentum and Fiesta Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Momentum position performs unexpectedly, Fiesta 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 Fiesta Restaurant will offset losses from the drop in Fiesta Restaurant's long position.| New Momentum vs. SosTravel SPA | New Momentum vs. Arma Services | New Momentum vs. Transat AT | New Momentum vs. Amadeus IT Holding |
| Fiesta Restaurant vs. BJs Restaurants | Fiesta Restaurant vs. Dine Brands Global | Fiesta Restaurant vs. Brinker International | Fiesta Restaurant vs. FAT Brands |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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