Correlation Between Potbelly and Golden Heaven
Can any of the company-specific risk be diversified away by investing in both Potbelly and Golden Heaven 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 Golden Heaven into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potbelly Co and Golden Heaven Group, you can compare the effects of market volatilities on Potbelly and Golden Heaven 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 Golden Heaven. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potbelly and Golden Heaven.
Diversification Opportunities for Potbelly and Golden Heaven
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Potbelly and Golden is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Potbelly Co and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven Group 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 Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of Potbelly i.e., Potbelly and Golden Heaven go up and down completely randomly.
Pair Corralation between Potbelly and Golden Heaven
Given the investment horizon of 90 days Potbelly Co is expected to generate 0.67 times more return on investment than Golden Heaven. However, Potbelly Co is 1.48 times less risky than Golden Heaven. It trades about 0.34 of its potential returns per unit of risk. Golden Heaven Group is currently generating about -0.12 per unit of risk. If you would invest 738.00 in Potbelly Co on September 1, 2024 and sell it today you would earn a total of 302.00 from holding Potbelly Co or generate 40.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Potbelly Co vs. Golden Heaven Group
Performance |
| Timeline |
| Potbelly |
| Golden Heaven Group |
Potbelly and Golden Heaven Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potbelly and Golden Heaven
The main advantage of trading using opposite Potbelly and Golden Heaven positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potbelly position performs unexpectedly, Golden Heaven 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 Golden Heaven will offset losses from the drop in Golden Heaven's long position.| Potbelly vs. FAT Brands | Potbelly vs. BJs Restaurants | Potbelly vs. One Group Hospitality | Potbelly vs. El Pollo Loco |
| Golden Heaven vs. Cimpress NV | Golden Heaven vs. Suburban Propane Partners | Golden Heaven vs. WiMi Hologram Cloud | Golden Heaven vs. Vistra Energy 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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