Correlation Between Restaurant Brands and SPoT Coffee
Can any of the company-specific risk be diversified away by investing in both Restaurant Brands and SPoT Coffee 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 SPoT Coffee 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 SPoT Coffee, you can compare the effects of market volatilities on Restaurant Brands and SPoT Coffee 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 SPoT Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Restaurant Brands and SPoT Coffee.
Diversification Opportunities for Restaurant Brands and SPoT Coffee
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Restaurant and SPoT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Restaurant Brands Internationa and SPoT Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPoT Coffee 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 SPoT Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPoT Coffee has no effect on the direction of Restaurant Brands i.e., Restaurant Brands and SPoT Coffee go up and down completely randomly.
Pair Corralation between Restaurant Brands and SPoT Coffee
Assuming the 90 days trading horizon Restaurant Brands International is expected to generate 0.15 times more return on investment than SPoT Coffee. However, Restaurant Brands International is 6.85 times less risky than SPoT Coffee. It trades about 0.03 of its potential returns per unit of risk. SPoT Coffee is currently generating about 0.0 per unit of risk. If you would invest 8,692 in Restaurant Brands International on August 25, 2024 and sell it today you would earn a total of 976.00 from holding Restaurant Brands International or generate 11.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Restaurant Brands Internationa vs. SPoT Coffee
Performance |
| Timeline |
| Restaurant Brands |
| SPoT Coffee |
Restaurant Brands and SPoT Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Restaurant Brands and SPoT Coffee
The main advantage of trading using opposite Restaurant Brands and SPoT Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Restaurant Brands position performs unexpectedly, SPoT Coffee 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 SPoT Coffee will offset losses from the drop in SPoT Coffee's long position.| Restaurant Brands vs. Canadian Tire | Restaurant Brands vs. Dollarama | Restaurant Brands vs. Nutrien | Restaurant Brands vs. Magna International |
| SPoT Coffee vs. Restaurant Brands International | SPoT Coffee vs. Enghouse Systems | SPoT Coffee vs. Metro Inc | SPoT Coffee vs. goeasy |
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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