Correlation Between Restaurant Brands and A W
Can any of the company-specific risk be diversified away by investing in both Restaurant Brands and A W 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 A W 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 A W FOOD, you can compare the effects of market volatilities on Restaurant Brands and A W 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 A W. Check out your portfolio center. Please also check ongoing floating volatility patterns of Restaurant Brands and A W.
Diversification Opportunities for Restaurant Brands and A W
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Restaurant and A W is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Restaurant Brands Internationa and A W FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A W FOOD 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 A W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A W FOOD has no effect on the direction of Restaurant Brands i.e., Restaurant Brands and A W go up and down completely randomly.
Pair Corralation between Restaurant Brands and A W
Assuming the 90 days trading horizon Restaurant Brands International is expected to generate 0.67 times more return on investment than A W. However, Restaurant Brands International is 1.5 times less risky than A W. It trades about 0.03 of its potential returns per unit of risk. A W FOOD is currently generating about -0.14 per unit of risk. If you would invest 8,703 in Restaurant Brands International on September 1, 2024 and sell it today you would earn a total of 1,048 from holding Restaurant Brands International or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 6.81% |
| Values | Daily Returns |
Restaurant Brands Internationa vs. A W FOOD
Performance |
| Timeline |
| Restaurant Brands |
| A W FOOD |
Restaurant Brands and A W Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Restaurant Brands and A W
The main advantage of trading using opposite Restaurant Brands and A W positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Restaurant Brands position performs unexpectedly, A W 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 A W will offset losses from the drop in A W's long position.| Restaurant Brands vs. Canadian Tire | Restaurant Brands vs. Dollarama | Restaurant Brands vs. Nutrien | Restaurant Brands vs. Magna International |
| A W vs. McDonalds Corp CDR | A W vs. Starbucks CDR | A W vs. Restaurant Brands International | A W 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |