Correlation Between Ark Restaurants and Noble Plc

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

Diversification Opportunities for Ark Restaurants and Noble Plc

0.44

Correlation Coefficient

Ark Restaurants  Noble Plc

Very weak diversification

The 3 months correlation between Ark and Noble is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc 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 Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Noble Plc go up and down completely randomly.

Pair Corralation between Ark Restaurants and Noble Plc

Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Noble Plc. In addition to that, Ark Restaurants is 1.33 times more volatile than Noble plc. It trades about -0.02 of its total potential returns per unit of risk. Noble plc is currently generating about -0.02 per unit of volatility. If you would invest  3,729  in Noble plc on December 3, 2024 and sell it today you would lose (1,139) from holding Noble plc or give up 30.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.59%
Values	Daily Returns

Ark Restaurants Corp  vs.  Noble plc

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.

Noble plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Noble plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ark Restaurants and Noble Plc

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

The idea behind Ark Restaurants Corp and Noble plc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.