Correlation Between Ark Restaurants and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Ark Restaurants and AMCON Distributing 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 Ark Restaurants and AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ark Restaurants Corp and AMCON Distributing, you can compare the effects of market volatilities on Ark Restaurants and AMCON Distributing 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 Ark Restaurants with a short position of AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and AMCON Distributing.
Diversification Opportunities for Ark Restaurants and AMCON Distributing
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ark and AMCON is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and Ark Restaurants 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 Ark Restaurants Corp are associated (or correlated) with AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and AMCON Distributing go up and down completely randomly.
Pair Corralation between Ark Restaurants and AMCON Distributing
Given the investment horizon of 90 days Ark Restaurants Corp is expected to generate 2.2 times more return on investment than AMCON Distributing. However, Ark Restaurants is 2.2 times more volatile than AMCON Distributing. It trades about 0.12 of its potential returns per unit of risk. AMCON Distributing is currently generating about 0.19 per unit of risk. If you would invest 1,025 in Ark Restaurants Corp on September 19, 2024 and sell it today you would earn a total of 154.00 from holding Ark Restaurants Corp or generate 15.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Ark Restaurants Corp vs. AMCON Distributing
Performance |
Timeline |
Ark Restaurants Corp |
AMCON Distributing |
Ark Restaurants and AMCON Distributing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ark Restaurants and AMCON Distributing
The main advantage of trading using opposite Ark Restaurants and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Restaurants position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.Ark Restaurants vs. Nathans Famous | Ark Restaurants vs. Flanigans Enterprises | Ark Restaurants vs. Good Times Restaurants | Ark Restaurants vs. Auburn National Bancorporation |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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