Correlation Between Potbelly and Alsea SAB
Can any of the company-specific risk be diversified away by investing in both Potbelly and Alsea SAB 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 Potbelly and Alsea SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potbelly Co and Alsea SAB de, you can compare the effects of market volatilities on Potbelly and Alsea SAB 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 Potbelly with a short position of Alsea SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potbelly and Alsea SAB.
Diversification Opportunities for Potbelly and Alsea SAB
Significant diversification
The 3 months correlation between Potbelly and Alsea is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Potbelly Co and Alsea SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alsea SAB de and Potbelly 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 Potbelly Co are associated (or correlated) with Alsea SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alsea SAB de has no effect on the direction of Potbelly i.e., Potbelly and Alsea SAB go up and down completely randomly.
Pair Corralation between Potbelly and Alsea SAB
Given the investment horizon of 90 days Potbelly Co is expected to generate 0.78 times more return on investment than Alsea SAB. However, Potbelly Co is 1.29 times less risky than Alsea SAB. It trades about 0.03 of its potential returns per unit of risk. Alsea SAB de is currently generating about -0.02 per unit of risk. If you would invest 1,019 in Potbelly Co on November 28, 2024 and sell it today you would earn a total of 173.00 from holding Potbelly Co or generate 16.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.61% |
| Values | Daily Returns |
Potbelly Co vs. Alsea SAB de
Performance |
| Timeline |
| Potbelly |
| Alsea SAB de |
Potbelly and Alsea SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potbelly and Alsea SAB
The main advantage of trading using opposite Potbelly and Alsea SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potbelly position performs unexpectedly, Alsea SAB 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 Alsea SAB will offset losses from the drop in Alsea SAB's long position.| Potbelly vs. FAT Brands | Potbelly vs. BJs Restaurants | Potbelly vs. One Group Hospitality | Potbelly vs. El Pollo Loco |
| Alsea SAB vs. Marstons PLC | Alsea SAB vs. Bagger Daves Burger | Alsea SAB vs. Flanigans Enterprises | Alsea SAB vs. Ark Restaurants Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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