Correlation Between Red Robin and Potbelly
Can any of the company-specific risk be diversified away by investing in both Red Robin and Potbelly 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 Red Robin and Potbelly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Robin Gourmet and Potbelly Co, you can compare the effects of market volatilities on Red Robin and Potbelly 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 Red Robin with a short position of Potbelly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Robin and Potbelly.
Diversification Opportunities for Red Robin and Potbelly
Average diversification
The 3 months correlation between Red and Potbelly is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Red Robin Gourmet and Potbelly Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potbelly and Red Robin 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 Red Robin Gourmet are associated (or correlated) with Potbelly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potbelly has no effect on the direction of Red Robin i.e., Red Robin and Potbelly go up and down completely randomly.
Pair Corralation between Red Robin and Potbelly
Given the investment horizon of 90 days Red Robin Gourmet is expected to under-perform the Potbelly. But the stock apears to be less risky and, when comparing its historical volatility, Red Robin Gourmet is 1.04 times less risky than Potbelly. The stock trades about -0.12 of its potential returns per unit of risk. The Potbelly Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 925.00 in Potbelly Co on November 28, 2024 and sell it today you would earn a total of 267.00 from holding Potbelly Co or generate 28.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Robin Gourmet vs. Potbelly Co
Performance |
| Timeline |
| Red Robin Gourmet |
| Potbelly |
Red Robin and Potbelly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Robin and Potbelly
The main advantage of trading using opposite Red Robin and Potbelly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Robin position performs unexpectedly, Potbelly 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 Potbelly will offset losses from the drop in Potbelly's long position.| Red Robin vs. Dine Brands Global | Red Robin vs. Bloomin Brands | Red Robin vs. BJs Restaurants | Red Robin vs. The Cheesecake Factory |
| Potbelly vs. FAT Brands | Potbelly vs. BJs Restaurants | Potbelly vs. One Group Hospitality | Potbelly vs. El Pollo Loco |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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