Correlation Between NYSE Composite and Potbelly
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Potbelly 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 NYSE Composite and Potbelly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Potbelly Co, you can compare the effects of market volatilities on NYSE Composite and Potbelly 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 NYSE Composite with a short position of Potbelly. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Potbelly.
Diversification Opportunities for NYSE Composite and Potbelly
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Potbelly is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Potbelly Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potbelly and NYSE Composite 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 NYSE Composite are associated (or correlated) with Potbelly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potbelly has no effect on the direction of NYSE Composite i.e., NYSE Composite and Potbelly go up and down completely randomly.
Pair Corralation between NYSE Composite and Potbelly
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.9 times less return on investment than Potbelly. But when comparing it to its historical volatility, NYSE Composite is 3.99 times less risky than Potbelly. It trades about 0.08 of its potential returns per unit of risk. Potbelly Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 550.00 in Potbelly Co on August 24, 2024 and sell it today you would earn a total of 442.00 from holding Potbelly Co or generate 80.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Potbelly Co
Performance |
| Timeline |
NYSE Composite and Potbelly Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Potbelly Co
Pair trading matchups for Potbelly
Pair Trading with NYSE Composite and Potbelly
The main advantage of trading using opposite NYSE Composite and Potbelly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Potbelly 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 Potbelly will offset losses from the drop in Potbelly's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Potbelly vs. FAT Brands | Potbelly vs. BJs Restaurants | Potbelly vs. One Group Hospitality | Potbelly vs. El Pollo Loco |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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