Correlation Between Wah Fu and FAT Brands
Can any of the company-specific risk be diversified away by investing in both Wah Fu 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 Wah Fu and FAT Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wah Fu Education and FAT Brands, you can compare the effects of market volatilities on Wah Fu 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 Wah Fu with a short position of FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Fu and FAT Brands.
Diversification Opportunities for Wah Fu and FAT Brands
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wah and FAT is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Wah Fu Education and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands and Wah Fu 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 Wah Fu Education 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 Wah Fu i.e., Wah Fu and FAT Brands go up and down completely randomly.
Pair Corralation between Wah Fu and FAT Brands
Given the investment horizon of 90 days Wah Fu Education is expected to under-perform the FAT Brands. In addition to that, Wah Fu is 2.02 times more volatile than FAT Brands. It trades about -0.25 of its total potential returns per unit of risk. FAT Brands is currently generating about 0.05 per unit of volatility. If you would invest 526.00 in FAT Brands on August 27, 2024 and sell it today you would earn a total of 6.00 from holding FAT Brands or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wah Fu Education vs. FAT Brands
Performance |
| Timeline |
| Wah Fu Education |
| FAT Brands |
Wah Fu and FAT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Fu and FAT Brands
The main advantage of trading using opposite Wah Fu and FAT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Fu 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.| Wah Fu vs. American Public Education | Wah Fu vs. Lincoln Educational Services | Wah Fu vs. Adtalem Global Education |
| FAT Brands vs. FAT Brands | FAT Brands vs. Cannae Holdings | FAT Brands vs. Nathans Famous | FAT Brands vs. Dine Brands Global |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |