Correlation Between Potbelly and Interactive Strength

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Can any of the company-specific risk be diversified away by investing in both Potbelly and Interactive Strength 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 Interactive Strength into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potbelly Co and Interactive Strength Common, you can compare the effects of market volatilities on Potbelly and Interactive Strength 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 Interactive Strength. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potbelly and Interactive Strength.

Diversification Opportunities for Potbelly and Interactive Strength

PotbellyInteractiveDiversified AwayPotbellyInteractiveDiversified Away100%
-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Potbelly and Interactive is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Potbelly Co and Interactive Strength Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Strength 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 Interactive Strength. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Strength has no effect on the direction of Potbelly i.e., Potbelly and Interactive Strength go up and down completely randomly.

Pair Corralation between Potbelly and Interactive Strength

Given the investment horizon of 90 days Potbelly Co is expected to generate 0.24 times more return on investment than Interactive Strength. However, Potbelly Co is 4.22 times less risky than Interactive Strength. It trades about 0.01 of its potential returns per unit of risk. Interactive Strength Common is currently generating about -0.17 per unit of risk. If you would invest  1,292  in Potbelly Co on November 14, 2024 and sell it today you would lose (46.00) from holding Potbelly Co or give up 3.56% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Potbelly Co  vs.  Interactive Strength Common

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -50050
JavaScript chart by amCharts 3.21.15PBPB TRNR
       Timeline  
Potbelly 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Potbelly Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Potbelly sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb910111213
Interactive Strength 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Interactive Strength Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb23456

Potbelly and Interactive Strength Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.28-9.2-6.11-3.030.03.36.7210.1313.5516.96 0.0050.0100.0150.0200.025
JavaScript chart by amCharts 3.21.15PBPB TRNR
       Returns  

Pair Trading with Potbelly and Interactive Strength

The main advantage of trading using opposite Potbelly and Interactive Strength positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potbelly position performs unexpectedly, Interactive Strength 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 Interactive Strength will offset losses from the drop in Interactive Strength's long position.
The idea behind Potbelly Co and Interactive Strength Common pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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