Correlation Between Potbelly and HelloFresh
Can any of the company-specific risk be diversified away by investing in both Potbelly and HelloFresh 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 HelloFresh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potbelly Co and HelloFresh SE, you can compare the effects of market volatilities on Potbelly and HelloFresh 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 HelloFresh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potbelly and HelloFresh.
Diversification Opportunities for Potbelly and HelloFresh
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Potbelly and HelloFresh is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Potbelly Co and HelloFresh SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HelloFresh SE 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 HelloFresh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HelloFresh SE has no effect on the direction of Potbelly i.e., Potbelly and HelloFresh go up and down completely randomly.
Pair Corralation between Potbelly and HelloFresh
Given the investment horizon of 90 days Potbelly is expected to generate 4.3 times less return on investment than HelloFresh. But when comparing it to its historical volatility, Potbelly Co is 1.98 times less risky than HelloFresh. It trades about 0.05 of its potential returns per unit of risk. HelloFresh SE is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 611.00 in HelloFresh SE on September 1, 2024 and sell it today you would earn a total of 589.00 from holding HelloFresh SE or generate 96.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Potbelly Co vs. HelloFresh SE
Performance |
| Timeline |
| Potbelly |
| HelloFresh SE |
Potbelly and HelloFresh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potbelly and HelloFresh
The main advantage of trading using opposite Potbelly and HelloFresh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potbelly position performs unexpectedly, HelloFresh 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 HelloFresh will offset losses from the drop in HelloFresh's long position.| Potbelly vs. FAT Brands | Potbelly vs. BJs Restaurants | Potbelly vs. One Group Hospitality | Potbelly vs. El Pollo Loco |
| HelloFresh vs. Biglari Holdings | HelloFresh vs. Potbelly Co | HelloFresh vs. Restaurant Brands International | HelloFresh vs. Red Robin Gourmet |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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