Correlation Between Dave Busters and El Pollo
Can any of the company-specific risk be diversified away by investing in both Dave Busters and El Pollo 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 Dave Busters and El Pollo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dave Busters Entertainment and El Pollo Loco, you can compare the effects of market volatilities on Dave Busters and El Pollo 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 Dave Busters with a short position of El Pollo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and El Pollo.
Diversification Opportunities for Dave Busters and El Pollo
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dave and LOCO is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and El Pollo Loco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Pollo Loco and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with El Pollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Pollo Loco has no effect on the direction of Dave Busters i.e., Dave Busters and El Pollo go up and down completely randomly.
Pair Corralation between Dave Busters and El Pollo
Given the investment horizon of 90 days Dave Busters is expected to generate 1.98 times less return on investment than El Pollo. In addition to that, Dave Busters is 1.76 times more volatile than El Pollo Loco. It trades about 0.05 of its total potential returns per unit of risk. El Pollo Loco is currently generating about 0.19 per unit of volatility. If you would invest 1,178 in El Pollo Loco on September 3, 2024 and sell it today you would earn a total of 94.00 from holding El Pollo Loco or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dave Busters Entertainment vs. El Pollo Loco
Performance |
| Timeline |
| Dave Busters Enterta |
| El Pollo Loco |
Dave Busters and El Pollo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dave Busters and El Pollo
The main advantage of trading using opposite Dave Busters and El Pollo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters position performs unexpectedly, El Pollo 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 El Pollo will offset losses from the drop in El Pollo's long position.| Dave Busters vs. Marcus | Dave Busters vs. News Corp B | Dave Busters vs. Warner Music Group | Dave Busters vs. Manchester United |
| El Pollo vs. FAT Brands | El Pollo vs. Potbelly Co | El Pollo vs. BJs Restaurants | El Pollo vs. One Group Hospitality |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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