Correlation Between One Group and FAT Brands
Can any of the company-specific risk be diversified away by investing in both One Group and FAT Brands 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 One Group and FAT Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One Group Hospitality and FAT Brands, you can compare the effects of market volatilities on One Group and FAT Brands 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 One Group with a short position of FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Group and FAT Brands.
Diversification Opportunities for One Group and FAT Brands
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between One and FAT is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding One Group Hospitality and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands and One Group 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 One Group Hospitality are associated (or correlated) with FAT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAT Brands has no effect on the direction of One Group i.e., One Group and FAT Brands go up and down completely randomly.
Pair Corralation between One Group and FAT Brands
Given the investment horizon of 90 days One Group Hospitality is expected to generate 5.11 times more return on investment than FAT Brands. However, One Group is 5.11 times more volatile than FAT Brands. It trades about 0.03 of its potential returns per unit of risk. FAT Brands is currently generating about 0.11 per unit of risk. If you would invest 352.00 in One Group Hospitality on August 28, 2024 and sell it today you would earn a total of 1.00 from holding One Group Hospitality or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
One Group Hospitality vs. FAT Brands
Performance |
| Timeline |
| One Group Hospitality |
| FAT Brands |
One Group and FAT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with One Group and FAT Brands
The main advantage of trading using opposite One Group and FAT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Group position performs unexpectedly, FAT Brands 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 FAT Brands will offset losses from the drop in FAT Brands' long position.| One Group vs. FAT Brands | One Group vs. Potbelly Co | One Group vs. BJs Restaurants | One Group vs. Rave Restaurant Group |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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