Correlation Between Alsea SAB and Restaurant Brands

Can any of the company-specific risk be diversified away by investing in both Alsea SAB and Restaurant 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 Alsea SAB and Restaurant Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alsea SAB de and Restaurant Brands International, you can compare the effects of market volatilities on Alsea SAB and Restaurant 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 Alsea SAB with a short position of Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alsea SAB and Restaurant Brands.

Diversification Opportunities for Alsea SAB and Restaurant Brands

0.74

Correlation Coefficient

Alsea SAB  Restaurant Brands

Poor diversification

The 3 months correlation between Alsea and Restaurant is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alsea SAB de and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands and Alsea SAB 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 Alsea SAB de are associated (or correlated) with Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Alsea SAB i.e., Alsea SAB and Restaurant Brands go up and down completely randomly.

Pair Corralation between Alsea SAB and Restaurant Brands

Assuming the 90 days horizon Alsea SAB de is expected to under-perform the Restaurant Brands. In addition to that, Alsea SAB is 3.28 times more volatile than Restaurant Brands International. It trades about -0.22 of its total potential returns per unit of risk. Restaurant Brands International is currently generating about -0.61 per unit of volatility. If you would invest  6,620  in Restaurant Brands International on October 23, 2024 and sell it today you would lose (572.00) from holding Restaurant Brands International or give up 8.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Alsea SAB de  vs.  Restaurant Brands Internationa

Alsea SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alsea SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Restaurant Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Restaurant Brands International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Alsea SAB and Restaurant Brands

The main advantage of trading using opposite Alsea SAB and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alsea SAB position performs unexpectedly, Restaurant 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.

The idea behind Alsea SAB de and Restaurant Brands International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.