Correlation Between Restaurant Brands and Ark Restaurants
Can any of the company-specific risk be diversified away by investing in both Restaurant Brands and Ark Restaurants 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 Ark Restaurants 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 Ark Restaurants Corp, you can compare the effects of market volatilities on Restaurant Brands and Ark Restaurants 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 Ark Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Restaurant Brands and Ark Restaurants.
Diversification Opportunities for Restaurant Brands and Ark Restaurants
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Restaurant and Ark is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Restaurant Brands Internationa and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants Corp 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 Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of Restaurant Brands i.e., Restaurant Brands and Ark Restaurants go up and down completely randomly.
Pair Corralation between Restaurant Brands and Ark Restaurants
Considering the 90-day investment horizon Restaurant Brands International is expected to under-perform the Ark Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, Restaurant Brands International is 5.37 times less risky than Ark Restaurants. The stock trades about -0.31 of its potential returns per unit of risk. The Ark Restaurants Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,276 in Ark Restaurants Corp on November 3, 2024 and sell it today you would earn a total of 55.00 from holding Ark Restaurants Corp or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Restaurant Brands Internationa vs. Ark Restaurants Corp
Performance |
| Timeline |
| Restaurant Brands |
| Ark Restaurants Corp |
Restaurant Brands and Ark Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Restaurant Brands and Ark Restaurants
The main advantage of trading using opposite Restaurant Brands and Ark Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Restaurant Brands position performs unexpectedly, Ark Restaurants 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 Ark Restaurants will offset losses from the drop in Ark Restaurants' long position.| Restaurant Brands vs. Yum Brands | Restaurant Brands vs. Papa Johns International | Restaurant Brands vs. Jack In The | Restaurant Brands vs. Dominos Pizza Common |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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