Correlation Between Papa Johns and Fiesta Restaurant
Can any of the company-specific risk be diversified away by investing in both Papa Johns and Fiesta Restaurant 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 Papa Johns and Fiesta Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Papa Johns International and Fiesta Restaurant Group, you can compare the effects of market volatilities on Papa Johns and Fiesta Restaurant 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 Papa Johns with a short position of Fiesta Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Papa Johns and Fiesta Restaurant.
Diversification Opportunities for Papa Johns and Fiesta Restaurant
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Papa and Fiesta is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Papa Johns International and Fiesta Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiesta Restaurant and Papa Johns 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 Papa Johns International are associated (or correlated) with Fiesta Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiesta Restaurant has no effect on the direction of Papa Johns i.e., Papa Johns and Fiesta Restaurant go up and down completely randomly.
Pair Corralation between Papa Johns and Fiesta Restaurant
Given the investment horizon of 90 days Papa Johns International is expected to generate 0.8 times more return on investment than Fiesta Restaurant. However, Papa Johns International is 1.25 times less risky than Fiesta Restaurant. It trades about -0.03 of its potential returns per unit of risk. Fiesta Restaurant Group is currently generating about -0.03 per unit of risk. If you would invest 6,922 in Papa Johns International on August 31, 2024 and sell it today you would lose (1,939) from holding Papa Johns International or give up 28.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 8.56% |
| Values | Daily Returns |
Papa Johns International vs. Fiesta Restaurant Group
Performance |
| Timeline |
| Papa Johns International |
| Fiesta Restaurant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Papa Johns and Fiesta Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Papa Johns and Fiesta Restaurant
The main advantage of trading using opposite Papa Johns and Fiesta Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Papa Johns position performs unexpectedly, Fiesta Restaurant 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 Fiesta Restaurant will offset losses from the drop in Fiesta Restaurant's long position.| Papa Johns vs. RLJ Lodging Trust | Papa Johns vs. Aquagold International | Papa Johns vs. Stepstone Group | Papa Johns vs. Morningstar Unconstrained Allocation |
| Fiesta Restaurant vs. BJs Restaurants | Fiesta Restaurant vs. Dine Brands Global | Fiesta Restaurant vs. Brinker International | Fiesta Restaurant vs. FAT Brands |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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