Correlation Between Auburn National and Flanigans Enterprises

Can any of the company-specific risk be diversified away by investing in both Auburn National and Flanigans Enterprises 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 Auburn National and Flanigans Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auburn National Bancorporation and Flanigans Enterprises, you can compare the effects of market volatilities on Auburn National and Flanigans Enterprises 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 Auburn National with a short position of Flanigans Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn National and Flanigans Enterprises.

Diversification Opportunities for Auburn National and Flanigans Enterprises

-0.23

Correlation Coefficient

Auburn National  Flanigans Enterprises

Very good diversification

The 3 months correlation between Auburn and Flanigans is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. and Flanigans Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flanigans Enterprises and Auburn National 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 Auburn National Bancorporation are associated (or correlated) with Flanigans Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flanigans Enterprises has no effect on the direction of Auburn National i.e., Auburn National and Flanigans Enterprises go up and down completely randomly.

Pair Corralation between Auburn National and Flanigans Enterprises

Given the investment horizon of 90 days Auburn National Bancorporation is expected to under-perform the Flanigans Enterprises. In addition to that, Auburn National is 1.23 times more volatile than Flanigans Enterprises. It trades about -0.09 of its total potential returns per unit of risk. Flanigans Enterprises is currently generating about -0.01 per unit of volatility. If you would invest  2,549  in Flanigans Enterprises on December 28, 2024 and sell it today you would lose (50.00) from holding Flanigans Enterprises or give up 1.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Auburn National Bancorp.  vs.  Flanigans Enterprises

Auburn National Banc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auburn National Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Flanigans Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Auburn National and Flanigans Enterprises

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

The idea behind Auburn National Bancorporation and Flanigans Enterprises 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.