Correlation Between Restaurant Brands and CCL Industries
Can any of the company-specific risk be diversified away by investing in both Restaurant Brands and CCL Industries 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 Restaurant Brands and CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Restaurant Brands International and CCL Industries, you can compare the effects of market volatilities on Restaurant Brands and CCL Industries 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 Restaurant Brands with a short position of CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Restaurant Brands and CCL Industries.
Diversification Opportunities for Restaurant Brands and CCL Industries
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Restaurant and CCL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Restaurant Brands Internationa and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and Restaurant Brands 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 Restaurant Brands International are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Restaurant Brands i.e., Restaurant Brands and CCL Industries go up and down completely randomly.
Pair Corralation between Restaurant Brands and CCL Industries
Assuming the 90 days trading horizon Restaurant Brands International is expected to generate 1.25 times more return on investment than CCL Industries. However, Restaurant Brands is 1.25 times more volatile than CCL Industries. It trades about -0.12 of its potential returns per unit of risk. CCL Industries is currently generating about -0.16 per unit of risk. If you would invest 9,731 in Restaurant Brands International on November 27, 2024 and sell it today you would lose (871.00) from holding Restaurant Brands International or give up 8.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Restaurant Brands Internationa vs. CCL Industries
Performance |
| Timeline |
| Restaurant Brands |
| CCL Industries |
Restaurant Brands and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Restaurant Brands and CCL Industries
The main advantage of trading using opposite Restaurant Brands and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Restaurant Brands position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.| Restaurant Brands vs. CCL Industries | Restaurant Brands vs. Quebecor | Restaurant Brands vs. George Weston 520 |
| CCL Industries vs. CCL Industries | CCL Industries vs. Quebecor | CCL Industries vs. Winpak | CCL Industries vs. Restaurant Brands International |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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