Correlation Between Ark Restaurants and Gap,

Can any of the company-specific risk be diversified away by investing in both Ark Restaurants and Gap, 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 Gap, 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 The Gap,, you can compare the effects of market volatilities on Ark Restaurants and Gap, 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 Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and Gap,.

Diversification Opportunities for Ark Restaurants and Gap,

0.18

Correlation Coefficient

Ark Restaurants  Gap,

Average diversification

The 3 months correlation between Ark and Gap, is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Gap, go up and down completely randomly.

Pair Corralation between Ark Restaurants and Gap,

Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Gap,. In addition to that, Ark Restaurants is 1.94 times more volatile than The Gap,. It trades about -0.07 of its total potential returns per unit of risk. The Gap, is currently generating about -0.03 per unit of volatility. If you would invest  2,346  in The Gap, on December 3, 2024 and sell it today you would lose (85.00) from holding The Gap, or give up 3.62% of portfolio value over 90 days.

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

Ark Restaurants Corp  vs.  The Gap,

Ark Restaurants Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking signals, Ark Restaurants reported solid returns over the last few months and may actually be approaching a breakup point.

Gap,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Ark Restaurants and Gap,

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

The idea behind Ark Restaurants Corp and The Gap, 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.