Correlation Between Restaurant Brands and Pinstripes Holdings
Can any of the company-specific risk be diversified away by investing in both Restaurant Brands and Pinstripes Holdings 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 Pinstripes Holdings 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 Pinstripes Holdings, you can compare the effects of market volatilities on Restaurant Brands and Pinstripes Holdings 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 Pinstripes Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Restaurant Brands and Pinstripes Holdings.
Diversification Opportunities for Restaurant Brands and Pinstripes Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Restaurant and Pinstripes is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Restaurant Brands Internationa and Pinstripes Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinstripes Holdings 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 Pinstripes Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinstripes Holdings has no effect on the direction of Restaurant Brands i.e., Restaurant Brands and Pinstripes Holdings go up and down completely randomly.
Pair Corralation between Restaurant Brands and Pinstripes Holdings
Considering the 90-day investment horizon Restaurant Brands International is expected to under-perform the Pinstripes Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Restaurant Brands International is 8.7 times less risky than Pinstripes Holdings. The stock trades about -0.2 of its potential returns per unit of risk. The Pinstripes Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Pinstripes Holdings on November 5, 2024 and sell it today you would earn a total of 5.00 from holding Pinstripes Holdings or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Restaurant Brands Internationa vs. Pinstripes Holdings
Performance |
| Timeline |
| Restaurant Brands |
| Pinstripes Holdings |
Restaurant Brands and Pinstripes Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Restaurant Brands and Pinstripes Holdings
The main advantage of trading using opposite Restaurant Brands and Pinstripes Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Restaurant Brands position performs unexpectedly, Pinstripes Holdings 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 Pinstripes Holdings will offset losses from the drop in Pinstripes Holdings' 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 |
| Pinstripes Holdings vs. Altria Group | Pinstripes Holdings vs. Air Products and | Pinstripes Holdings vs. Chemours Co | Pinstripes Holdings vs. Compania Cervecerias Unidas |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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