Correlation Between Autogrill SpA and Restaurant Brands

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

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

Diversification Opportunities for Autogrill SpA and Restaurant Brands

-0.67

Correlation Coefficient

Autogrill SpA  Restaurant Brands

Excellent diversification

The 3 months correlation between Autogrill and Restaurant is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Autogrill SpA ADR and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands and Autogrill SpA 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 Autogrill SpA ADR 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 Autogrill SpA i.e., Autogrill SpA and Restaurant Brands go up and down completely randomly.

Pair Corralation between Autogrill SpA and Restaurant Brands

If you would invest  825.00  in Autogrill SpA ADR on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Autogrill SpA ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.61%
Values	Daily Returns

Autogrill SpA ADR  vs.  Restaurant Brands Internationa

Autogrill SpA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autogrill SpA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Autogrill SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 relatively invariable basic indicators, Restaurant Brands is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Autogrill SpA and Restaurant Brands

The main advantage of trading using opposite Autogrill SpA and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autogrill SpA 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 Autogrill SpA ADR 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.